Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), indicated that inflation this year is stronger than expected, creating new uncertainties regarding whether and when interest rate cuts might occur.
On the 16th (local time), Powell stated at the Washington Forum on the Canadian economy held in Washington D.C., "Recent data has not clearly provided greater confidence that inflation is making progress toward the Fed's target."
He added, "Instead, it suggests that it may take longer than expected to achieve such confidence," and said it is appropriate to allow more time for the Fed's restrictive monetary policy.
Powell also said, "However, I believe we are in a good policy position to respond to the risks we face."
Powell's remarks came a day after the release of the U.S. March retail sales data.
According to the U.S. Department of Commerce, retail sales last month increased by 0.7% compared to the previous month, exceeding market expectations of 0.4%. As a strong labor market supports consumption and the risk of entrenched hot inflation grows, the yield on the U.S. 10-year Treasury note, a global bond rate benchmark, surpassed the 4.6% level. This is the highest level in five months since mid-November last year. This has led to expectations that the Fed will be more cautious about cutting interest rates.
Some are even discussing a no landing scenario for the U.S. economy, where growth continues without a downturn, and are forecasting that the Fed might raise interest rates again.
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