The Federal Reserve Board published a speech by Vice Chair Philip N. Jefferson setting out an updated U.S. outlook in which growth continues and the labour market is roughly in balance, but inflation remains above the 2 percent goal and near-term uncertainty has increased. He supported the Federal Open Market Committee decision to hold the target range for the federal funds rate steady, arguing that the current stance is broadly around neutral and positioned to respond to downside labour-market risks and upside inflation risks. Jefferson cited 2025 real gross domestic product growth of about 2 percent and projected a similar or slightly faster pace in 2026, with headwinds from persistently higher energy costs and heightened geopolitical risk. Unemployment was 4.4 percent last month, while job growth has slowed and become more concentrated, with a three-month moving average of payroll gains of 6,000 in February; easing labour supply growth from lower net immigration has helped keep unemployment steady. On inflation, he estimated 12-month personal consumption expenditures inflation at 2.8 percent for the period ended in February and core PCE inflation at 3.0 percent, with progress on disinflation having stalled largely due to tariffs; he expects headline inflation to rise in the short term as energy prices increase, including gasoline prices that are about USD 1 higher per gallon than before the recent Middle East conflict. The speech also highlighted channels through which sustained energy-price shocks could broaden price pressures, while noting that the United States is now a net energy exporter and that Texas, where energy accounts for about 15 percent of economic output and 2.6 percent of employment, could see offsetting gains alongside higher costs for households and energy-intensive businesses. Looking ahead, he framed further rate adjustments as dependent on incoming data, the evolving outlook, and the balance of risks, with energy prices and trade policy uncertainty among the factors to be monitored.
Federal Reserve Board 2026-03-26
Federal Reserve Board Vice Chair Jefferson backs keeping rates steady as tariffs and energy prices stall disinflation
Federal Reserve Board Vice Chair Philip N. Jefferson outlined an updated U.S. economic outlook, noting growth and a balanced labor market, but persistent inflation above the 2 percent target and increased near-term uncertainty. He supported the Federal Open Market Committee's decision to maintain the federal funds rate, citing the current stance as neutral and responsive to labor market and inflation risks. Jefferson highlighted factors such as energy costs and geopolitical risks impacting growth and inflation, with future rate adjustments dependent on evolving data and risk assessments.