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Fed Vice Chair Jefferson says current policy suits job support and inflation path
Jefferson warned that if inflation does not cool, the Fed may need to reconsider its stance, citing risks that overlapping energy and tariff shocks could entrench inflation expectations.
Federal Reserve Vice Chair Philip Jefferson said the Fed’s current policy stance is positioned to support the job market while allowing inflation to resume its decline toward the 2% target, Reuters reported via FXStreet on Thursday.
He said the stance is data-dependent and can be adjusted if inflation fails to start cooling, adding that the Fed must ensure it delivers price stability even when shocks affect the economy.
Jefferson highlighted a policy dilemma created by overlapping energy shock and trade shock from tariffs, which he said have had near-term effects on output and prices.
He also pointed to two developments the Fed is monitoring, the Middle East conflict, and the proliferation of AI, noting the energy impact may be more muted for demand because the US is a net oil exporter, while AI could influence inflation depending on whether demand effects or productivity gains arrive first.