By Greg Robb
Philip Jefferson, one of the three newest members of the Federal Reserve board of governors, on Tuesday used his first speech to say that high inflation was his biggest concern.
“In my brief time on the Federal Open Market Committee, we have acted boldly to address rising inflation, and we are committed to taking the further steps necessary,” Jefferson said, in remarks to a conference in Atlanta organized by three of the Fed’s district banks.
Jefferson, a former college college professor and administrator, was sworn into office in May, just in time for the Fed to engineer three supersized 0.75 percentage point increases in its benchmark interest rate, bringing it to a range of 3%-3.25%.
That’s an historically fast pace of rate hikes, but the Fed has signaled it is likely not finished. Officials have penciled in a “terminal” rate in a range of 4.5%-4.75% that they said they’re likely to hit next year.
In his speech, Jefferson echoed Fed Chairman Jerome Powell’s assessment that the economy needs a period of “below-trend growth” in order to cool down high inflation that is still running at 40-year highs.
“I want to assure you that my colleagues and I are resolute that we will bring inflation back down to 2%,” he said, a remark that puts him squarely in the mainstream of Fed thinking about the policy outlook.
Jefferson, who was appointed by President Joe Biden, gave no sign that he might favor a more dovish monetary policy that some Democrats espouse.
Progressive Democrats like Sen. Elizabeth Warren of Massachusetts said she is worried that Fed’s efforts to counter inflation will put “millions of people out of work.”
The pace of Fed rate hikes has also unnerved some Wall Street economists, who worry the central bank might be tightening financial conditions too fast and will miss the exit, overdo the rate hikes, and push the economy into recession.
In his remarks, Jefferson said that the U.S. job market remains very tight.
As economic growth has slowed, supply-demand conditions in the job market seem likely to ease some, he said.
There are already “some indications” from survey data that supply bottlenecks have begun to ease.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.76% has fallen to 3.6% Tuesday after briefly touching 4% late last week, as some investors sense the Fed might not hike rates as much as they have projected.