Fed's Jefferson says slowing progress on inflation is 'a source of concern'

By Greg Robb

Fed vice chair backs holding rates steady until there is evidence that inflation is falling

The slowing progress on inflation in the first quarter is disappointing, but the healthy labor market allows the Federal Reserve to maintain downward pressure on demand until price pressures cool, Federal Reserve Vice Chair Philip Jefferson said on Monday.

The "attenuation" in the progress on bringing down inflation that has been seen in the first three months of the year "is a source of concern," Jefferson said in brief comments regarding the current economy after a speech on communication strategy at the Cleveland Federal Reserve Bank.

With the economy in a solid position in terms of job growth, the Fed can focus "even more so" on inflation and keep rates higher for longer, he said.

"We continue to look for evidence that inflation is going to return to our 2% target. And until we have that, I think it is appropriate to keep the policy rate in restrictive territory," Jefferson said.

Jefferson became the No. 2 Fed official last September. His views closely align with Fed Chair Jerome Powell, who will speak Tuesday.

The 10-year Treasury yield BX:TMUBMUSD10Y has fallen below 5% since the Fed's last meeting April 30-May 1.

-Greg Robb

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05-13-24 1001ET

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