Fed Chairman Powell stated that recent inflation data exceeding expectations may delay rate cuts, exacerbating market concerns about economic slowdown.

Surpassing Expectations: Powell noted at a Washington Q&A session that inflation data over the past three months has consistently exceeded expectations, denting the Fed's confidence in inflation returning to target levels.

Adjustment in Rate Cut Outlook: Initially anticipated by the market before summer, precautionary rate cuts might be delayed due to persistently high inflation. Powell emphasized the Fed's readiness to implement rate cuts if a sharp economic slowdown occurs.

Market Reactions: Following Powell's remarks, the S&P 500 index experienced a slight decline, with investors selling US Treasuries, leading to higher bond yields. The 2-year Treasury yield reached 5% for the first time since November last year.

Risks of Economic Slowdown: While the Fed may implement rate cuts before a significant economic slowdown, once a recession has begun, rate cuts often struggle to halt economic decline.