10:47 AM EDT, 05/14/2024 (MT Newswires) -- It may take longer for restrictive monetary policy to impact inflation than previously expected, requiring the Federal Open Market Committee to keep rates higher for longer, Federal Reserve Chair Jerome Powell said Tuesday.

Powell said during a live conversation with De Nederlandsche Bank President Klaas Knot at the annual general meeting of the Foreign Bankers' Association that the US economy is performing "very well" with a strong labor market, rising employment and wages, though with some signs of "gradual" cooling.

While Powell repeated he does not see the next move by the FOMC being a rate increase, saying the current policy is already restrictive, he added the federal funds rate may need to remain elevated for longer due to the lack of progress seen on inflation this year.

Inflation is expected to slow through 2024, he said, but his level of confidence is lower after disappointing inflation readings in Q1. Asked about the producer price data for April released Tuesday morning, which showed stronger price growth than expected, Powell said he would characterize it as a "mixed" reading rather than the "hot" assessment some market participants have offered.