Speech by Vice Chair Jefferson on the U.S. economy and monetary policy

… Considering the economic conditions that persisted through mid-September, the FOMC voted last month to raise the target range for the federal funds rate by a 1/4 percentage point to 3-3/4 to 4 percent as shown in <a data-caption="" data-content="" data-flickr="false" data-gallery="global-figures" data-title="" data-toggle="lightbox" href="/newsevents/images/jefferson-20261001-fig8.png" id="fig">figure 8</a>. I supported that decision because I saw it as the appropriate policy to pursue the Fed's dual mandate. This was an important step to ensure longer-term inflation expectations remain well anchored and to validate the public's confidence that we will achieve our 2 percent inflation objective in a timely manner.</p> <p>As I described, I see economic activity and labor market conditions remaining broadly solid while inflation remains above our target. The economy is being buffeted by a cascade of shocks, including rising energy prices, the surging AI buildout, and changes to trade policy. We do not have the luxury of considering each of these shocks in isolation. Rather, we must consider how this cascade might affect the entire economy when setting policy to achieve our dual-mandate objectives.</p> <p>As we look ahead, my view is that any future adjustments in policy should be determined by carefully examining trends in the data, the evolving outlook, and the balance of risks. Since our September meeting, yields across the term structure have increased further, a sign that investors are reassessing the evolving macroeconomic landscape. My colleagues and I will need to come to our own judgment, which may take more time. I will continue to assess whether underlying trends suggest that inflation will return to target with sufficient speed. With more data in hand, such trends may lend themselves to better discernment, as may the appropriate stance of monetary policy.</p> …