One of the members of the Board of Governors of the Federal Reserve, and Vice President-designate, Philip Jefferson, said that he is more optimistic than other officials in the US Central Bank about the path of inflation, considering that the institution is “on the right path.”
“We are on the right track,” Jefferson stressed during a speech delivered at the Hoover Institution in Stanford, California. “Is inflation still too high? Yes, is the current inflation decline uneven and slower than we all wish? Yes.”
He stressed that the Federal Reserve “is doing what is necessary and expected. Monetary policy affects the economy and inflation with long and uneven deadlines, and the full effect of our rapid (policy) tightening is not yet likely to happen.”
These statements contrast with the statements of other reserve officials who did not rule out a new hike in interest rates this week, while the markets widely expect these increases to stop.
Inflation eased slightly in the United States, coming in at 4.9% year-on-year, the Consumer Price Index (CPI) released on Wednesday showed. However, at a monthly rate, inflation rose to 0.4 percent, compared to 0.1 percent in March.
The Federal Reserve prefers another measure of inflation, which is the personal consumption expenditures (PCE) index, which is issued at the end of the month and counts on its decline to 2%, after it was 4.2% in March at an annual rate.
And Philip Jefferson continued: “The good news is that food and energy prices fell in March, and the bad news is that there was only a slight progress in the level of latent inflation,” that is, related to other categories.
He also stressed the existence of “great uncertainty about the extent of the tightening of borrowing conditions during the coming year, in response to the banking crisis and the size of the possible repercussions of this tightening on the US economy,” acknowledging the existence of “the risk that the impact will be greater than expected.”
Since March 2022, the Federal Reserve has raised the main interest rate by five percentage points, from 0 to 0.25%, to between 5 and 5.25%. The next meeting of the Federal Reserve will be held on June 13-14.
On Friday, US President Joe Biden chose Philip Jefferson, who joined the Federal Reserve Board of Governors in May 2022, to assume the position of Vice President of the Federal Reserve, and the Senate should confirm this appointment.