The hope for interest-rate cuts from the Federal Reserve early this year appear to be fading.
Fed Chair Jerome Powell is indicating that an inflation rate that stays stubbornly high could push any rate cuts until later this year.
Powell, speaking during a panel discussion Tuesday, said recent data has dimmed the Fed’s confidence that inflation is being brought 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,” Powell said during a panel discussion at the Wilson Center, according to the Associated Press. “If higher inflation does persist, we can maintain the current level of (interest rates) for as long as needed.”
Back in March Powell told a Senate committee that the Fed was “not far” from gaining the confidence it needed to cut rates. At a news conference on March 20, Powell appeared to downplay that assertion. But his comments Tuesday went further in dimming the likelihood of any rate cuts in the coming months, according to the AP report.
Data released by the government has shown inflation remains above the Fed’s 2% target 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, according to the AP report.
