US Federal reserve Chair Jerome Powell said that elevated inflation will likely delay any interest rate cuts until later this year. During a panel discussion, he said, “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.”
“If higher inflation does persist, we can maintain the current level of (interest rates) for as long as needed,” he added.
The remarks are disparate from his earlier comments on March 7 when he told a Senate committee that the Fed was “not far” from gaining the confidence it needed to cut rates.
Government data showed that inflation remains above the Fed’s 2% target and while the economy is still growing robustly. Year-over-year inflation rose to 3.5% in March from 3.2% in February while core prices also rose sharply for a third straight month.
Government data also showed that retail sales jumped last month signalling robust job growth and higher stock prices and home values which are fueling solid household spending.
US Fed Vice Chair Philip Jefferson said he expected inflation to continue to slow this year with the Fed’s key rate “held steady at its current level.” He also said that if inflation keeps slowing, “it will likely be appropriate” for the Fed to cut rates “at some point this year”.
