Fed's Jefferson: Wage inflation too high to be consistent with timely return to 2% inflation

Eren Sengezer FXStreet

Wage growth in the US is running too high to be consistent with a timely and sustainable return to the Federal Reserve's 2% inflation objective, Federal Reserve Governor Philip Jefferson said on Friday.

Additional takeaways

"Fed is addressing inflation promptly, forcefully to maintain its credibility, preserve inflation anchor."

"Outlook for non-housing core services inflation depends on whether labor demand moves into better balance with labor supply."

"Ongoing imbalance between supply and demand for labor suggests high inflation may come down only slowly."

"Fed's credibility is higher now than in 1960s and 1970s."

"Argument that policymakers should accept that disinflation will be costly is well-reasoned."

"Current situation is different from past inflation fights."

"Policymakers must complement findings from economic models with careful scrutiny of real-time data."

Market reaction

The US Dollar Index showed no immediate reaction to these comments and was last seen rising 0.6% on the day at 105.19.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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