The Federal Reserve indicated Wednesday it may begin cutting interest rates as early as September, after new data showed inflation falling to its lowest level in two years.

Consumer prices rose just 2.1% year-over-year in May, down from 2.3% in April and well below the 3.4% peak recorded last summer. The Core PCE index, the Fed’s preferred inflation measure, came in at 2.5%.

Fed Chair Jerome Powell noted that “the disinflationary trend appears to be firmly established” but emphasized the central bank would need several more months of data before making a decision.

Markets responded enthusiastically, with the S&P 500 climbing 1.8% and the Dow adding 450 points.