Fed's Jefferson warns Fed is not in a rush to change rates

Federal Reserve (Fed) Board of Governors Vice Chair Philip Jefferson had the dubious honor of being the first high-profile Fed speaker out of the gate after the Trump administration's tariff announcements this week. Fed VC Jefferson noted that although economic data remains stable overall, policy uncertainty remains the key risk to the Fed's rate trajectory, and added his own warning to the growing pile of caution flags from Fed policymakers that the Fed may be forced to stand pat on interest rates even longer than expected if inflation and the labor market don't continue to improve.

Key quotes

• There is no need to be in a hurry on policy rate adjustments.
• We could retain current policy restraint for longer, or ease policy, depending on inflation progress and the job market.
• The current policy rate is well-positioned to deal with risks and uncertainties.
• The latest data shows inflation moving sideways.
• The labor market solid and well-balanced.
• Policy rate is now somewhat restrictive.
• The rise in goods inflation is partly due to trade policy, a drop in housing services inflation could help counter.
• Longer-term inflation expectations remains consistent with the 2% goal.
• I am vigilant on the spillovers from the Federal government layoffs to other sectors.
• I anticipate some modest labor market softening this year.
• There are recent signs that consumer spending may be weakening.
• Negative sentiment often doesn't translate to slowdown in actual activity.
• If uncertainty worsens, economic activity may be constrained.
• The economy is solid, but heightened uncertainty among consumers and businesses is tied to trade policy.
• There is still substantial uncertainty around trade.
• Uncertainty can weigh on spending and investment decisions.
• It will be important to take our time and think about the impact.
• When assessing policy changes, I try to focus on collective policies, including fiscal and immigration regulation.
• Net effect of all policies that influence view on monetary policy.
• I don't want to overreact to what may be proposed today.