Fed Chair Jerome Powell said on Tuesday that this year’s inflation data has been “disappointing” and will require patience from the central bank regarding monetary policy. “We did not expect this to be a smooth path. But inflation readings have been higher than I think anyone expected,” Powell added.

Speaking at the annual meeting of the Global Banking Association in Amsterdam, Powell provided positive remarks about the state of the economy and the U.S. labor market. His comments come a day before the anticipated release of the U.S. Consumer Price Index data.

Powell noted that the U.S. labor market is currently strong and is returning to its pre-pandemic balance. He believes that the gradual improvement in the labor market will impact inflation levels. Regarding first-quarter inflation data, Powell admitted it was below expectations and showed a setback in the fight against inflation. However, he stressed the need for patience and allowing monetary policy to do its work.

Powell expects the U.S. economy to grow by 2% or more, dismissing recession predictions even with the unemployment rate at 3.9%. He also noted that the first-quarter inflation indicators reduced his confidence in a strong downward trajectory for inflation this year. Producer Price Index data were described as largely mixed.

His remarks followed an unexpected 0.5% increase in producer prices in April, according to the Bureau of Labor Statistics, surpassing Dow Jones’ estimate of 0.3%. March’s reading was revised from an initial 0.2% increase to a 0.1% decrease.