Jefferson Cautions Against Next Rate Hike Amid Market Reassessment

Philip Jefferson, Federal Reserve Vice Chair, said that while he supports the recent interest rate increase, there is no urgency to make another move. In remarks delivered at the University of Virginia's Darden School of Business, Jefferson emphasized the need for careful examination of trends in data and the evolving outlook before making a decision on future policy adjustments.

Jefferson noted that markets are reassessing the outlook due to rising bond market yields, and he stated that his colleagues and himself will need time to come to their own judgment about the next rate move. The Fed lifted its benchmark interest rate by 0.25% to a range of 3.75%-4.00% at its September 15-16 meeting.

Jefferson also discussed inflation, stating that it is expected to remain elevated in the near term before resuming its decline toward the Fed's 2% goal as energy and other price shocks fade. However, he added that risks to his inflation forecast are tilted to the upside due to recent geopolitical developments and stronger-than-anticipated aggregate demand.