Federal Reserve Chair Jerome Powell said that a new inflation report released Friday is "along the lines of what we want to see," sticking to an assertion that inflation is still on a "bumpy path" to the central bank's goal of 2%.

"It's not as low as most of the good readings we got in the second half of last year, but it's definitely more along the lines of what we want to see," Powell said during a question-and-answer session at a San Francisco Federal Reserve conference.

Powell was referring to new data released earlier Friday showing a slight cooling in the Personal Consumption Expenditures index, which is the Fed's preferred inflation gauge.

The year-over-year change in the so-called "core" Personal Consumption Expenditures index — which excludes volatile food and energy prices — clocked in at 2.8% for the month of February. That was in line with economist expectations and down from 2.9% in January.

Core prices rose 0.3% from January to February, which was also in line with expectations and down from 0.5% in the previous month.

The new numbers did show less of a cooling than last year, and Powell reiterated that the central bank needs to see more good inflation readings like those in the second half of 2023.

The Fed didn’t overreact to good inflation data last year, he said, and won’t overreact to two months of higher inflation data this year.

"The question then is, are those just bumps or are they something more than bumps? Is progress on inflation going to slow for more than two months?"

The Fed chair maintained the Fed’s base case is still the expectation that inflation will drop.

"We expect inflation to come down on a sometimes bumpy path to 2%," said Powell. "But if that doesn't happen, then obviously our rate policy will be different."

Powell says the Fed doesn’t want to cut too soon and risk inflation popping back up, while at the same time the central bank does not want to wait too long and cause unnecessary harm to the economy.

Still Powell noted, the job market and the economy are strong right now and "that means that we don't need to be in a hurry to cut," he said.

"It means we can wait and, and become more confident that in fact, inflation is coming down to 2% on a sustainable basis."

Markets, which are closed for Good Friday, priced in a better than 60% chance Thursday the Fed will begin cutting rates in June.

The Fed decided last Wednesday to hold interest rates steady and maintain projections for three rate cuts this year. Officials also raised their outlook for inflation and economic growth.

Powell's comments today reinforce those he made following that last Fed policy meeting, where said the overall inflation picture hasn't changed much despite hotter inflation data.

Some other Fed officials have been cautioning investors to be patient about the pace of rate cuts.

Fed Governor Chris Waller, for example, said Wednesday that he is in no hurry to cut and needs to see at least a couple months of better data before he has enough confidence that an easing of monetary policy will keep inflation on its path down to the Fed's 2% target.

"There is no rush to cut the policy rate,” Waller said in a speech in New York.

Meanwhile, Atlanta Fed president Raphael Bostic also said last week he now expects only one rate cut this year and thinks that cut will happen later in the year than previously expected.

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