(Reuters – Federal Reserve Vice Chair Philip Jefferson on Thursday said that with the U.S. economy in solid shape, tariffs already pushing upward on goods inflation, and higher than usual uncertainty over the outlook, he is inclined to leave the policy rate at its currently modestly restrictive level while keeping a close eye on what happens next with jobs and prices.
“In my view, there is no need to be in a hurry to make further policy rate adjustments,” Jefferson said in remarks prepared for delivery at an Atlanta Fed conference, repeating what has become a well-worn phrase from U.S. central bankers amid a rapid onslaught of trade and other policy changes under the Trump administration. “The current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.
Jefferson did not directly address the sweeping new import levies U.S. President Donald Trump announced late Wednesday, or give an assessment of how they might in his view add to inflationary pressures or slow the economy. He did say that consumers and business are expressing increased uncertainty tied to recent trade policy developments, and that trade policy, or the anticipation of changes to it, is behind at least some of the rise in goods inflation that has stymied progress toward the Fed’s 2% inflation goal.
“Significant changes in trade, immigration, fiscal, and regulatory policies currently are in process,” he said. “It will be crucial to evaluate the cumulative effect of these policy changes as we assess the economy and consider the path of monetary policy.”
The Fed kept its policy rate in its current 4.25%-4.50% range at its meeting last month, a decision Jefferson said he supported in light of an economy that’s starting to show some signs of slowing, inflation that’s moving sideways, and an unclear outlook.
“If the economy remains strong and inflation does not continue to move sustainably toward 2%, the current policy restraint could be retained for longer,” Jefferson said, using language that Powell also laid out last month, before the most recent tariffs were announced. “If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, policy could be eased accordingly.”
(Reporting by Ann Saphir; Editing by Andrea Ricci)
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