Jerome Powell urges patience on rate cuts after key inflation index higher than expected

Federal Reserve Chair Jerome Powell admitted Tuesday inflation was falling more slowly than expected after a key gauge exceeded analysts’ estimates.

The Producer Price Index (PPI), which measures prices at the wholesale level, increased by 0.5% last month, topping the 0.3% forecast by Dow Jones — and signaling continued pressure on consumers.

Powell said the Fed will likely have to keep decades-high interest rates at current levels for longer than initially hoped during the annual general meeting of the Foreign Bankers’ Association in Amsterdam.

“I expect that inflation will move back down … on a monthly basis to levels that were more like the lower readings that we were having last year,” Powell said.

However, he said “my confidence in that is not as high as it was” given faster than expected inflation through the first three months of the year.

“We did not expect this to be a smooth road. But these [inflation readings] were higher than I think anybody expected,” Powell said.