Elevated inflation will likely hinder rate cuts this year, Powell says
WASHINGTON — Federal Reserve Chair Jerome Powell on Tuesday cautioned that persistently elevated inflation will likely delay any Fed interest rate cuts until later this year, opening the door to a period of higher-for-longer rates.
“Recent data have clearly not given us greater confidence” that inflation is coming fully 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, 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 may carry out fewer than the three quarter-point reductions its officials had forecast during their most recent meeting in March.
His remarks Tuesday represented a shift for Powell, who on March 7 had told a Senate committee that the Fed was “not far” from gaining the confidence it needed to cut rates. At a news conference March 20, Powell appeared to downplay that assertion. But his comments Tuesday went further in dimming the likelihood of any rate cuts in the coming months.
In the past several weeks, government data has shown that inflation remains stubbornly above the Fed’s 2% target and that the economy is still growing robustly. Year-over-year inflation rose to 3.5% in March, from 3.2% in February. And a closely watched gauge of “core” prices, which exclude volatile food and energy, rose sharply for a third consecutive month.
As recently as December, Wall Street traders had priced in as many as six quarter-point rate cuts this year. Now they foresee only two rate cuts, with the first coming in September.
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. The Fed’s rate stands at a 23-year high of 5.3% after 11 rate hikes beginning two years ago.
Ohio River barge: A barge operator believes it has found a sunken barge in the Ohio River near Pittsburgh, one of 26 that broke loose and floated away during weekend flooding, company officials said Tuesday.
Crews used sonar to locate an object in a stretch of river north of the city, which Campbell Transportation Company Inc. said it presumes to be its missing barge.
The river remained closed to maritime traffic while the company worked to salvage the runaway barges.
Israel pavilion in Italy: The artist and curators representing Israel at this year’s Venice Biennale announced on Tuesday they won’t open the Israeli pavilion exhibit until there is a cease-fire in Gaza and an agreement to release hostages seized by Hamas on Oct. 7.
Their decision, praised as courageous by the festival’s main curator, was posted on a sign in the window of the Israeli pavilion on the first day of media previews, ahead of the Biennale contemporary art fair opening on Saturday.
“The art can wait, but the women, children and people living through hell cannot,” the curators said in a statement together with the artist. It expressed horror at both the plight of Palestinians in Gaza and that of the relatives of hostages seized in the militant Hamas group’s Oct. 7 attack on Israel.
Israel is among 88 national participants in the 60th Venice Biennale, which runs from April 20-Nov. 24. The Israeli pavilion was built in 1952 as a permanent representation of Israel inside the Giardini, the original venue of the world’s oldest contemporary art show and the site of 29 national pavilions. Other nations show in the nearby Arsenale or at venues throughout the city.
This year, the Israeli exhibit has been titled “(M) otherland” by artist Ruth Patir.