| Just when the narrative on the US economy appeared to be shifting from soft landing to stagflation, the chair of the Federal Reserve has stepped in to hose down the doubters. Instead of seeing a slowing economy that's about to be strangled by high inflation, Jerome Powell tried to dismiss those fears on Wednesday, saying conditions remain robust and plenty of jobs are available. Stagflation takes a grip when growth slows and prices accelerate, a nightmare scenario for policymakers. "I don't see the stag or the flation," Powell told reporters. Yet the Fed chair seemed on much less certain ground when he tried to assert that an interest-rate cut is still possible even as inflation continues to sting. If that was hopeful news for households and businesses dealing with the highest borrowing costs in over two decades, the downer came when Powell admitted he doesn't know when that cut might come.  Powell at his news conference. Photographer: Al Drago/Bloomberg "I don't know how long it'll take," Powell said. "I can just say that when we get that confidence then rate cuts will be in scope, and I don't know exactly when that will be." That mixed messaging sums up the story for the US economy as it transitions from the red-hot pace set through 2023 to the slower, but so far still healthy, clip in 2024. For context, in January traders were betting on around six quarter-point cuts this year. Now they are tipping only one as high prices for car insurance and rent mean progress on inflation has stalled. Friday will deliver another crucial update when employment data for April is released. Economists have forecast that 250,000 jobs were added in the month, below March's 303,000 but still a striking pace of jobs growth. If those numbers are in the ballpark of what's expected, it will only bolster the idea that the Fed has little reason to lower rates. Yet if the employment data surprises on the downside, it will cement concerns that the economy is losing momentum. Those advocating for lower borrowing costs say the longer rates stay as high as they are, the greater the risk to the economy. Consumer confidence fell in April to its lowest since mid-2022 as Americans' views of the labor market and their outlook for the economy deteriorated. Which is why Powell's task is getting ever more trickier—how to talk tough on inflation but also hold out the prospect of mortgage rate relief. For now, that relief seems some way off. "Readings on inflation have come in above expectations," Powell said. "It is likely that gaining such greater confidence will take longer than previously expected." —Enda Curran, Bloomberg News | 
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