The latest reading of the Fed's preferred inflation indicator showed prices rose at a slower-than-expected monthly rate in August.
The core Personal Consumption Expenditure (PCE) index, which excludes food and energy costs and is closely watched by the Federal Reserve, rose 0.1% from a month earlier in August, below Wall Street expectations of 0.2% and the 0.2% reading seen in July.
Over the past year, prices rose 2.7% in August, matching Wall Street expectations and higher than the 2.6% seen in July.
The report is the first indication of inflation since the Federal Reserve cut interest rates by half a percentage point on September 18. In a press conference after the decision, Powell noted that the Fed now has "greater confidence" in the trajectory of inflation toward the central bank's 2% target.
Powell argued that a further slowdown in the labor market is now as big a concern for the Fed as inflation.
"The upside risk to inflation has really decreased, but the downside risk to employment has increased," Powell said. "And because we've been patient and not in a rush to cut rates while inflation is coming down, I think we're now in a very good position to manage the risks of both of our goals."
Friday's data comes as investors are divided over whether the Fed will cut interest rates by 25 or 50 basis points at its meeting in November. As of now, investors are pricing in a 50% chance of a 50 basis point interest rate cut, based on CME's FedWatch Tool.
