Good morning! Phil here, writing to you from Manhattan. Jay Powell’s Tuesday speech was a doozy.

TLDR: Interest rates aren’t coming down anytime soon.

Scroll for the deep-dive. After, we’re getting into bank earnings, Trump Media’s latest swing, and the stock sell-off in Europe and Asia.

*At a glance:

Powell’s pivot habit

The Fed changes course as fast as a docked aircraft carrier. Yet policymakers still can’t stop flip-flopping.

Speaking Tuesday, Fed Chair Powell said inflation hasn’t dropped as fast as anticipated, so interest rates won’t be coming down anytime soon.

“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell noted.

Treasury yields climbed during his remarks.

“That said, we think policy is well positioned to handle the risks that we face.”

In December, Powell had signaled the central bank was ready to lower rates as many as three times in 2024.

At the time, markets celebrated as if the vaunted “Fed pivot” — from rate hikes to cuts — had arrived.

But after three hotter-than-expected inflation prints, the outlook is shifting again.

Powell has pivoted from the pivot.

“The Fed picked a bad time to have a communication problem on the path of rates this year,” said Jamie Cox, managing partner for Harris Financial Group.

Last week, March CPI clocked in at 3.5% year-over-year — lower than its 9% peak from 2022 but still trending in the wrong direction.

A worsening conflict in the Middle East, too, could push oil prices higher and inflation could follow suit.

So, the Fed does have reason to sit idle. Inflation is indeed sticky, the labor market remains robust at least on the surface, and consumer spending appears steady.

Plus, stocks have crushed it to start the year.

Until the full consequences of high rates show up across the economy, the case for easing policy isn’t as strong as it might be.

And that should matter for a Fed that’s branded itself as “data-dependent” for years.

For what it’s worth, Powell did seem like he was attempting to ward off concerns of additional rate hikes, according to David Page, head of macro research at AXA Investment Managers.

“[Powell’s speech] looks to justify our recent call to delay the first cut beyond June,” Page told me. “But we still expect softer inflation to allow the Fed to begin cutting rates before year-end.”

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