Fed Vice Chair Jefferson says current monetary policy is well positioned to deal with what likely lies ahead, Future Fed moves will be driven by data and views on outlook

Policy

• Fed's stance allows 'leeway' for the supply side of the economy to develop.
• Policy is roughly in a neutral stance.

Economic Outlook

• Is cautiously optimistic about economic outlook.
• Expects the economy to grow by 2.2% in 2026.

Jobs

• Job market stabilizing, inflation should moderate.
• The job market is likely in balance with a low-hire, low-fire environment.
• Job market softer on reduced demand, immigration issues.

Inflation

• Strong commitment to price stability reduces inflation risks.
• Tariffs likely represent a one-time shift in price level.
• Possible that stronger productivity could temper inflation pressures.
• Tariffs were a key driver of inflation in 2025, price pressures should ease in 2026.
• PCE price index likely rose 2.9% in December Y/Y.
• While upside risks remain, he expects inflation pressures to ease.