MNI BRIEF: Recent Data Have Not Given Fed Confidence - Powell

Federal Reserve Chair Jerome Powell Tuesday dialed back expectations on rate cuts, noting that firm inflation last quarter has introduced new uncertainty over when the Fed will be able to lower interest rates this year.

"The recent [inflation] data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence" that inflation will return to 2%, Powell said at a Wilson Center event. "That said, we think policy is well positioned to handle the risks that we face if higher inflation does persist. We can maintain the current level of restriction for as long as needed. At the same time, we have significant space to ease should the labor market unexpectedly weaken." (See: MNI INTERVIEW: One Fed Cut Most Likely 2024 Outcome - Keister)

Powell noted the labor market remains strong, with the unemployment holding under 5% for 26 consecutive months, but said estimates of 12-month core PCE inflation are little changed for March at 2.8% "and the three- and six-month measures of inflation are actually above that level."