Fed's Powell: Elevated inflation will likely delay rate cuts this year

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell cautioned Tuesday that persistently elevated inflation will likely delay any Fed rate cuts until later this year, opening the door to a period of higher-for-longer interest rates.

“Recent data have clearly not given us greater confidence” that inflation is coming 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.

“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 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.