In a speech in Detroit, Federal Reserve Board Vice Chair Philip N. Jefferson set out his outlook for the U.S. economy and labor market and discussed implications for monetary policy, judging that growth is continuing around its potential pace, the labor market is roughly in balance but susceptible to adverse shocks, and inflation remains above the Federal Reserve’s 2 percent target. Jefferson noted gross domestic product growth of about 2 percent in 2025 and expected a similar or slightly faster pace this year, supported by resilient consumer spending, healthy business investment, and high-tech capital spending linked to artificial intelligence infrastructure, while highlighting uncertainty from Middle East conflict-related disruptions and the risk that sustained higher energy prices could weigh on spending. On inflation, he estimated personal consumption expenditures (PCE) inflation at 2.8 percent for the 12 months ending in February and core PCE inflation at 3.0 percent, with progress over the past year stalling mainly due to tariffs and near-term headline pressure expected from higher energy prices. On the labor market, he described a 2025 cooling with slower labor force growth driven largely by a sharp decline in net migration and an unemployment rate rising from 4.0 percent in January 2025 to 4.5 percent in November 2025, followed by signs of stabilization, including a March unemployment rate of 4.3 percent and 178,000 payroll gains in March, while average job gains of about 70,000 per month in the first quarter were characterized as subdued but potentially consistent with a steady unemployment rate given slower labor force growth. Turning to policy, Jefferson pointed to downside risk to the labor market and upside risk to inflation, and indicated the current stance is positioned to respond to a range of outcomes. He supported the Federal Open Market Committee’s March decision to hold the federal funds target range steady and noted that policy had been eased by 175 basis points over the past year and a half, placing rates broadly in the neutral range, with further adjustments to be guided by incoming data, the evolving outlook, and the balance of risks.
Federal Reserve Board 2026-04-07
Federal Reserve Board Vice Chair Jefferson says current policy stance is near neutral after 175 basis point cuts as inflation stays above target
Federal Reserve Board Vice Chair Philip N. Jefferson said U.S. growth is near potential, the labor market roughly in balance but vulnerable to shocks, and inflation still above the 2 percent target. He cited resilient demand, high-tech investment, and geopolitical and energy-price risks, with PCE inflation at 2.8 percent and core PCE at 3.0 percent, and a cooling but stabilizing labor market. Jefferson backed the FOMC’s decision to keep the federal funds rate unchanged after 175 basis points of easing over 18 months, saying policy is near neutral and future moves will be data-dependent.