Fed’s Jefferson says he is focusing on inflation as US labor market ‘very resilient’
Federal Reserve Vice Chair Philip Jefferson said Thursday it was appropriate to focus on returning inflation to the central bank’s 2% target, given the U.S. labor market has been “very resilient” to the current energy shock.
Speaking at a BOJ and think tank conference in Tokyo, he said, “When I’m thinking about my policy decision meeting by meeting, I’m absolutely focused on price stability, but by mandate I also need to keep in mind what’s happening in the labor market.” He added, “The U.S. labor market has been very resilient to the current shock. Given that resiliency, it seems appropriate that the focus will be on returning inflation to 2%.”
His remarks were his first since Kevin Warsh was sworn in last Friday as the Fed’s new chair. Jefferson said it was hard to say “moment by moment” what the Fed’s rate policy would be given uncertainty over the extent and duration of the war-related energy shock.
He noted that “all segments of society” are seeing higher energy and gasoline prices, adding, “We are sensitive to how that’s impacting the lives of everyday people.” At the same time, he said AI-driven investment was supporting growth alongside the drag from higher energy costs. “The energy shock is a headwind for growth, but we are still having growth during this episode,” he said, adding that policymakers are watching second-round effects from supply shocks and stronger investment demand.
In prepared remarks, he said policy is currently well positioned despite ongoing upside risks to inflation. He also said, “I have not prejudged the next meeting,” referring to the June 16–17 Federal Open Market Committee meeting, and said he looks forward to discussions with colleagues on meeting the Fed’s dual mandate.
