Rate Climbs as Fed Chair Powell Calls for ‘Patience’ on Rate Cuts

The price of spot gold was up 0.9% at $2,357.98 per ounce as of 5 p.m. ET Tuesday after a report showed wholesale inflation rose more than expected in April and Federal Reserve Chair Jerome Powell called for “patience” on interest rate cuts. 

Wholesale Inflation Hotter Than Expected in April

The Labor Department reported the Producer Price Index (PPI) measuring wholesale prices was up 0.5% in April, more than economists had forecast. The year-over-year PPI of 2.2% was in line with estimates. Wholesale inflation is considered a leading indicator for consumer inflation, as increased costs for producers are often passed on to consumers.

The Labor Department also revised downward March’s data, which initially showed wholesale inflation gained 0.2% that month. Tuesday’s report adjusted the figure to a 0.1% decline.

Wednesday, officials will be releasing the Consumer Price Index (CPI), which is expected to be 3.4% higher than in April 2023, compared to a 3.5% annual increase in March, according to forecasts.

Fed Chair Powell Signals Against More Rate Hikes

Federal Chair Powell Tuesday joined other Fed officials in saying that recent inflation figures have been more elevated than anticipated, pushing policymakers to keep interest rates higher for longer to tamp it down.

However, in comments during a panel discussion at the Foreign Bankers’ Association in Amsterdam, he suggested that more rate hikes likely won’t be needed. Powell added that time is needed to let the Fed’s previous monetary tightening to take full effect.

“We’ll need to be patient and let restrictive policy do its work,” Powell said.