Fed Vice Chair Jefferson: Sept rate cut was 'timely'
- The Federal Reserve's 50-basis-point interest-rate cut last month was"timely" and was neither reactive, nor proactive, Fed Vice Chair Philip Jefferson said on Tuesday.
The Fed's success in meeting the first mandate by bringing down inflation, he said, allowed the U.S. central bank"to pay increased attention to the other side of the mandate." "Our goal over the past two years has been to bring inflation down without causing an undue or unorderly increase in the unemployment rate," Jefferson said."And that's why we held the policy rate at a very high level for an extended period of time, because we wanted to bring inflation down and the labor market was performing very well."
"The performance of the labor market gave us the headroom, if you will, to keep policy ... in restrictive territory for a long period of time," Jefferson said. But unemployment's upward drift - it is now 4.1% - and the decline in inflation to nearer to the Fed's 2% goal made it appropriate to"recalibrate" policy, he said.
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