Fed Gov. Philip Jefferson
Fed vice chair Jefferson (voting member) speaking and says:
- We need to move carefully to balance the risks of tightening too much or too little
- May be too soon to say confidently we have tightened enough.
- Mindful of lag effects of past rates as I consider whether we will need further policy tightening.
- Rising long-term yields in the past may have meant investors seek stronger economic momentum and need for higher for longer Fed rate path
- Mindful that changes in real yields can arise from changes investors view of risk, uncertainty.
- Will keep higher bond yields in mind in assessing future rate path.
- Recent inflation data encouraging, but inflation still too high.
- Core PCE prices will moderate further as labor market comes into better balance.
- Labor market remains tight, but labor demand is falling. Supply is improving.
- There is a path to restoring price stability without a large gain in unemployment.
- Expect further gradual easing of labor market conditions.
- I am particularly attentive to upside inflation risks from a strong economy, labor market, energy prices.
- Downside risks to economic activity include slowdown in China, and Europe
As far as rate hike probabilities:
- There was a 30% chance of a hike on Friday for the next meeting in November. That is now down to 14%.
- There was a 45% chance of a hike on Friday in December. That is now down to 27%.