Fed’s Powell says elevated inflation will likely delay rate cuts this year

Federal Reserve Chair Jerome Powell cautioned Tuesday that persistently elevated inflation will likely delay any Fed rate cuts until later this year because “recent data have clearly not given us greater confidence” that price increases are under control.

Quick Read

• Fed Chair Jerome Powell’s Inflation Warning: Powell indicated that due to persistently high inflation, the Federal Reserve is likely to delay any anticipated rate cuts until later this year, expressing a need for more concrete signs that inflation pressures are easing.
• Inflation Trends More Stubborn Than Expected: During a discussion at the Wilson Center, Powell highlighted that recent inflation data do not inspire confidence in a quick resolution to high price levels, suggesting that it may take longer than previously anticipated to bring inflation down to the Fed’s target.
• Fed’s Rate Cut Projections Adjusted: Powell’s remarks imply that the Federal Reserve might execute fewer than the three quarter-point rate cuts previously forecasted in March, contingent on forthcoming economic data showing a decline in inflation.
• Context of Powell’s Remarks: These comments came after Fed Vice Chair Philip Jefferson’s speech, which also hinted at fewer rate cuts this year, affirming a cautious approach by the Fed in response to ongoing high inflation rates.

The Associated Press has the story:

Fed’s Powell says elevated inflation will likely delay rate cuts this year

Newslooks- WASHINGTON (AP) —

Federal Reserve Chair Jerome Powell cautioned Tuesday that persistently elevated inflation will likely delay any Fed rate cuts until later this year because “recent data have clearly not given us greater confidence” that price increases are under control.

The most recent inflation reports “instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said during a panel discussion at the Wilson Center. “If higher inflation does persist, we can maintain the current level of restriction for as long as needed.”

The Fed chair’s comments suggested that without further evidence that inflation is falling, the central bank will likely carry out fewer than the three quarter-point reductions its officials had forecast during their most recent meeting in March.

Powell’s comments followed a speech earlier Tuesday by Fed Vice Chair Philip Jefferson, who also appeared to raise the prospect that the Fed would would not carry out three cuts this year in its benchmark rate, which stands at a multi-decade high after 11 rate hikes beginning two years ago.

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