When will the Fed cut rates? Senators are likely to put Jay Powell on the spot when he testifies

Federal Reserve Chair Jerome Powell will be in the hot seat again on Thursday when he testifies before the Senate Banking Committee. On Wednesday, he was in front of the House Financial Services Committee.

One of the big questions Powell is expected to face in the Senate Thursday: When will the Fed cut interest rates?

Massachusetts Senator Elizabeth Warren is on the Banking Committee. She was one of a group of Democrats who sent a letter to Powell earlier this year saying that rate hikes have aggravated the housing crisis and asking the Fed to "reverse" them. One of the first questions Powell got Wednesday was on the timing of a future rate cut.

"We think because of strength in the economy and the strength in the labor market and the progress we've made, we can approach that step carefully and thoughtfully and with greater confidence, and when we reach that confidence, the expectation is we will do so sometime this year," Powell responded.

But Powell would not be pinned down on exactly when. First, he wants to see inflation steadily cooling toward the Federal Reserve's 2% target. The chair was also asked if he thinks there will be a recession, and he said there's no reason to expect one.

"We'll see continued growth at a solid pace," he said. "I will say there's no evidence, no reason to think the U.S. economy is in — or in some kind of short-term risk of falling into — a recession."

Powell noted that it's possible we could have a soft landing, where the Fed's interest rate hikes are just enough to slow the economy and cool inflation without causing a recession.