Jerome Powell's indication that the battle against inflation could take longer than expected weighed on hopes for interest rate cuts this year. Photo: JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA/Getty Images via AFPAsian markets fluctuated Wednesday as Federal Reserve boss Jerome Powell's indication that interest rates could stay higher for longer offset a rebound following the latest bout of Middle East-fuelled selling.
A string of hotter-than-expected data on inflation and jobs in the first three months has forced investors to whittle down their bets on how many interest rate cuts the Fed will make this year. "The recent data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence," he warned Tuesday in Washington."Given the strength of the labour market and progress on inflation so far, it is appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us.
"Anything short of reaffirming the 'higher for longer' would likely have raised even more questions about the Fed's credibility."