Fed Vice Chair Philip Jefferson highlighted the shift in the balance of risks between the central bank’s two mandates: inflation and employment.
Jefferson noted at an event overnight that “risks to inflation have diminished,” while “risks to employment have risen,” bringing these factors into closer balance.
He emphasized that the robust performance of the labor market provided Fed with “headroom” to keep policy in restrictive territory for an extended period.
However, with unemployment drifting upward, now at 4.1%, and inflation closer to the 2% target, Jefferson acknowledged it was appropriate to consider “recalibrating” monetary policy.
