Fed Vice Chair Jefferson: Sept rate cut was 'timely'
Tweet
Share
E-mail
FILE PHOTO: Federal Reserve Governor Philip Jefferson attends the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming, U.S., August 22, 2024. REUTERS/Ann Saphir/File Photo
(Reuters) - The Federal Reserve's 50-basis-point interest-rate cut last month was "timely" and was neither reactive, nor proactive, Fed Vice Chair Philip Jefferson said on Tuesday.
"It was timely and consistent" with the Fed's two mandates of attaining 2% inflation and maximum employment, Jefferson said at Davidson College in North Carolina.
The Fed's success in meeting the first mandate by bringing down inflation, he said, allowed the U.S. central bank "to pay increased attention to the other side of the mandate."
Jefferson voted in September with the majority of his colleagues to reduce the Fed's policy rate, marking a turning point in what had been a two-year battle against inflation that took U.S. borrowing costs to their highest levels in decades.
"Our goal over the past two years has been to bring inflation down without causing an undue or unorderly increase in the unemployment rate," Jefferson said. "And that's why we held the policy rate at a very high level for an extended period of time, because we wanted to bring inflation down and the labor market was performing very well."
Unemployment, rather than rising as the Fed raised rates as was the case in prior battles with inflation, had held steadily under 4% for most of that time.
"The performance of the labor market gave us the headroom, if you will, to keep policy ... in restrictive territory for a long period of time," Jefferson said. But unemployment's upward drift - it is now 4.1% - and the decline in inflation to nearer to the Fed's 2% goal made it appropriate to "recalibrate" policy, he said.
(Reporting by Ann Saphir; Editing by Sandra Maler and Leslie Adler)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Mother of man wounded by ICE in Texas describes video call moments after shooting
- Alaska Air expects Boeing 737 MAX 10 certification this monthÂ
- One dead after security forces open fire during Ebola burial in Congo, sources say
Create E-mail Alert Related Categories
ReutersSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
