Jerome Powell warns Fed needs more time to battle stubborn inflation, likely delaying rate cuts
Federal Reserve Chair Jerome Powell cautioned Tuesday that persistently elevated inflation will likely d💎elay any Fed rate cuts until later this year because “recent data have clearly not given us greater confidence” that price increases arღe under control.
“Recent data have clearly not given us greater confidence”❀ that inflation is coming fully under control and “instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powel𝔉l said during a panel discussion at the Wilson Center.
“If higher inflation does persist,” he said, “we can maintain the current 💎level of (interest rates) for as long as needed.”
The Fed chair’s comments suggested that without further evidence 𒐪that 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.
His remarks Tuesday represented a shift for Powell, who on March 7 had told a Senate committee that the Fed�� was “not far” from gaining the confidence it nee💝ded to cut rates. At a news conference on M🀅arch 20, Powell appeared to d🅘ownplay that assertion. But his comments Tuesday went further in dimming the likelihood of any rate cuts in the coming months.
In the past severa෴l weeks, government data has shown that inflation and that the economy is still growing robustly. Year-over-year inflation rose to 3.5% in March, from 3.2% in February. And a closely watched gauge of “core” prices, which exclude volatile food and energy, rose sharply for a third straight month.
A🥀s recently as December, Wall Street traders had priced in as many as six quarter-point rate cuts this year. Now they foresee only two rate cuts, with the first coming in September.
Powell’s comments followed a speech earlier Tuesday by Fed Vice Chair Philip Jefferson, who also appeared to raise the p𝓀rospect 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.
Jefferson said he expects inflation to continue to slow this year with the Fed’s key rate “held steadꦫy at its current level.” But he omitted a reference to the likelihood of futur꧂e rate cuts that he had included in a previous speech in February.
Last mon𒉰th, Jefferson had said that should inflation keep slowing, “it will likely be appropriate” for the Fed to cut rates “at some point this year” — language that Powell has also used. Yet⛄ neither Powell or Jefferson made any similar reference Tuesday.
Instead, Powell said only that the Fed could reduce rates “should the labor market un꧂ex🐼pectedly weaken.”
Fed officials have respon🌄ded to recent reports that the economy remains stജrong and by underscoring that they see little urgency to reduce their benchmark rate anytime soon.
On Monday, the government reported that last month, the latest sign that robust job growth and high𝓀er stock prices and home values are fueling solid household spending. Vigorous consumer spending can keep inflation elevated because it can 🙈lead some businesses to charge more, knowing that many people are able to pay higher prices.
