Federal Reserve Vice Chair Philip Jefferson suggested that the central bank’s key rate may have to remain at its peak for a while to bring down persistently elevated inflation. Jefferson said he expects inflation to continue to slow this year.
FILE - Philip Jefferson, then-nominee to be a member of the Federal Reserve Board of Governors, listens during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Feb. 3, 2022, in Washington. WASHINGTON — Federal Reserve Vice Chair Philip Jefferson suggested Tuesday that the central bank’s key rate may have to remain at its peak for a while to bring down
In a speech, Jefferson said he expects inflation to continue to slow this year. But he omitted a reference to the likelihood of future rate cuts that he had included in a previous speech in February. Instead, he said his outlook is that inflation will cool even with the Fed’s key rate “held steady at its current level.”
If elevated inflation proves more persistent than he expects, Jefferson added, “it will be appropriate” to keep rates at their current level “for longer” to help slow inflation to the Fed’s 2% target level. U.S.
In February, Jefferson had said that should inflation keep slowing, “it will likely be appropriate” for the Fed to cut rates “at some point this year” — language that Powell has also used. Yet that line was excluded from Jefferson’s remarks Tuesday. “While we have seen considerable progress in lowering inflation, the job of sustainably restoring 2% inflation is not yet done,” Jefferson said.
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