MNI: Fed's Powell Urges Patience, Says Inflation To Move Down

Federal Reserve Chair Jerome Powell on Tuesday called for patience in allowing higher interest rates to do their work to slow the economy and bring inflation back to 2% but said his confidence in the path of disinflation has fallen.

The first quarter of inflation data "was notable for its lack of further progress on inflation," Powell said. "We did not expect this to be a smooth road, but these were higher than I think anybody expected."

“What that has told us is we’ll need to be patient and let restrictive policy do its work," he said at a bankers' conference in Amsterdam.

The FOMC in March was nearly evenly split between cutting rates two or three times by the end of the year but policymakers have hinted the timing may be pushed back. (See: MNI INTERVIEW: Demand Boom Keeps Fed Patient For Longer-Koenig)

Powell said he expects inflation will move back down on a monthly basis to levels "more like the lower readings of last year," but "my confidence in that is not as high as it was, having seen these ratings in the in the first three months of the year."

The stronger-than-expected PPI data Tuesday was "mixed," he noted, adding "I wouldn't call it hot."

Powell also expects continued growth at 2% or better and the labor market to stay strong but "move further and further into into balance," he said.