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Fed Vice Chair Jefferson says further hikes possible if inflation worsens
Jefferson warned that tariffs, Middle East tensions, and higher energy prices raise the risk of entrenched inflation and unanchored expectations.
Federal Reserve Vice Chair Philip Jefferson said the Fed is not ruling out another interest rate hike if inflation fails to cool, while arguing that the current policy stance remains appropriate for now.
Speaking in prepared remarks at the Stanford Institute for Economic Policy Research, Jefferson said the Fed’s current approach should support the labor market and allow inflation to resume its decline toward the 2% target. He added that if inflation does not start to cool soon, it could be appropriate for policymakers to reconsider the stance.
Jefferson emphasized upside inflation risks, citing the “quick succession of shocks” and warning that these could make inflation entrenched and expectations unanchored. He pointed to tariffs, Middle East tensions, and higher energy prices as key factors.
He also said oil price moves could matter for whether longer-term inflation expectations rise persistently. Jefferson highlighted artificial intelligence as a potential source of productivity gains but warned that near term AI optimism could boost investment and consumption before those gains materialize, adding to inflation risks.