Fed Vice Chair Philip Jefferson stated in a speech that his “baseline outlook” anticipates further decline in inflation while maintaining the current policy rate. He expects the labor market to stay robust and labor demand and supply continue to rebalance.
However, Jefferson also cautioned that the economic outlook is “still quite uncertain” and highlighted the potential challenges if inflation proves to be more persistent than anticipated.
“If incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer,” Jefferson said.
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