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

WASHINGTON — 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.

“If higher inflation does persist," he said, “we can maintain the current level of for as long as needed.” Powell's comments followed a speech earlier Tuesday by Fed Vice Chair Philip Jefferson, who also appeared to raise the prospect that the Fed would not carry out three cuts this year in its benchmark rate, which stands at a multi-decade high after 11 rate hikes beginning two years ago.

Last month, Jefferson had said that should inflation keep slowing, “it will likely be appropriate” for the Fed to cut rates “at some point this year” — language that Powell has also used. Yet that line was excluded from Jefferson’s remarks Tuesday.

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