Jerome Powell just now: “The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence”

Federal Reserve Chair Jerome Powell suggested on Tuesday that interest rate cuts may not happen as quickly as previously anticipated, citing a "lack of progress" in cooling inflation this year.

Why it matters: Powell's comments indicate that the Fed could maintain the current, two-decade high level of rates for a longer period as it evaluates incoming economic data. This marks his first public remarks since last week's report showing higher-than-expected inflation.

What they're saying: "Given the strength of the labor market and the progress on inflation so far, it's appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us," Powell said during a moderated discussion with Canada's top central banker in Washington.

Powell's sentiments were echoed by Fed Vice Chair Philip Jefferson, who stated in a speech earlier on Tuesday that it would be prudent to keep rates unchanged for a longer period "if incoming data suggest that inflation is more persistent than I currently expect it to be."

Context: In recent months, Fed officials have expressed the need for more confidence that inflation is genuinely returning to the central bank's 2% target before considering rate cuts.

However, the March Consumer Price Index (CPI) report marks the third consecutive report indicating a stall in progress on inflation after a rapid cooldown in 2023.
"The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence," Powell said.