The most recent data shows that there has been no progress this year in reducing inflation, thus the Federal Reserve needs more time before it can reduce interest rates, said Jerome Powell, Chair of the Federal Reserve on Tuesday. Powell mentioned that this year, the interest-rate committee has emphasized that they need greater confidence that inflation is sustainably moving towards the 2% target before it would be appropriate to lower rates.

Although financial markets had previously expected the first rate cut to come in June, recent high inflation readings have now pushed the expected timing of the first cut to September, according to the CME FedWatch tool. Powell noted that inflation had “declined quite significantly over the second half of last year.” However, inflation data released last week indicates that the 12-month annual inflation rate, measured by the personal consumption expenditures index, stood at 2.8% in March, little changed from February, and shorter-term 3-month and 6-month measures are likely to be even higher.

Powell stated that if high inflation persists, the Fed can maintain the current level of interest rates, between 5.25%-5.5%, “for as long as needed.” He added that the Fed has room to cut rates if the labor market unexpectedly weakens, and noted that the current level of rates is “restrictive,” or putting downward pressure on demand, thus helping to cool inflation.