Having raised the key borrowing rate nine times since 2015 as the economy expanded, most recently in December past year, the Fed last month opened the door to a rate cut amid signs of slowing.
Signs of a pick-up in underlying inflation, together with a strong labour market could, however, temper expectations that the Fed will lower borrowing costs at least twice this year.
Comments from Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, cross the wires as he responds to questions from members of the Congress at the second day of his semi-annual monetary policy testimony before the Committee on Financial Services.
Before then, however, the market will turn its attention to US consumer inflation data on Thursday and the quarterly corporate earnings season which begins next week.
In June, core inflation was pushed up by higher rents and a 1.6 percent jump in used vehicle and truck prices, which followed four straight months of decline.
Some statistics of the June US CPI was comparable to May's CPI with food prices staying steady at 0.3% in May and in June.
The CPI report showed prices for used cars and trucks rose 1.6% from the prior month, and 1.2% from a year earlier.
"Core CPI inflation is still only 2.1%, up a tenth from May, but the NFIB signals a rising trend to 2.7% by next spring". The core PCE price index increased 1.5% year-on-year in May and has undershot its target this year.More news: Iran Says It Welcomes France’s Efforts to Save Nuclear Deal
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Several others also noted that the current low unemployment rate had yet to push up inflation, which suggested that the steady hiring of recent months isn't likely to overheat the economy. Economists had expected jobless claims to inch up to 223,000. Mr Waller works for St Louis Fed president James Bullard, who dissented at the June meeting in favour of a quarter-point rate cut.
Benchmark 10-year Treasury notes last fell 8/32 in price to yield 2.089%, from 2.061% late on Wednesday. This has helped to keep inflation moderate.
The dollar index against a basket of six major currencies stood little changed at 97.081 after retracing much of its losses on Thursday, when it had briefly stooped to a six-day low of 96.795.
People shop at an H&M store during the grand opening of the The Hudson Yards development, a residential, commercial, and retail space on Manhattan's West side in New York City, New York, U.S., March 15, 2019.
In June, owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3%, matching May's gain. The Shanghai Composite was up fractionally while Hong Kong's Hang Seng index jumped 0.75 percent.
Spot gold was up 0.3 per cent at US$1,422.40 per ounce as at 0711 GMT, after earlier hitting its highest since July 3 at US$1,426.
The pan-European STOXX 600 climbed 0.2% after losing 1.4% over the past four sessions.