Federal Reserve chair Jerome Powell said Tuesday that hot US inflation data has lowered his level of confidence that price rises will slow back down towards the bank’s long-term target.
“The first quarter in the United States was notable for its lack of further progress on inflation,” the head of the US central bank said during an event in the Netherlands that was streamed online.
“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” he continued. “And so what that has told us is we’ll need to be patient and let restrictive policy do its work.”
The Fed has held interest rates at a 23-year high as it looks to bring inflation down to its long-term two percent target.
After making progress for much of last year, the rate at which consumer prices have been rising has accelerated since the start of 2024, pushing back expectations of interest rate cuts.
Powell said that, while he still expected inflation to move back down towards the levels seen last year, “my confidence in that is not as high as it was having seen these readings in these first three months of the year.”
But despite the recent uptick in inflation, Powell said he did not think it was necessary to raise rates from their current “restrictive” levels.
“I don’t think it’s likely, based on the data that we have, that the next move that we make would be a rate hike,” he said.
“I think it’s more likely that we’ll be at a place where we hold the policy rate where it is,” he added.
