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Fed's Jefferson Sees Steady Policy Despite Inflation Risks
Fed Vice Chair Jefferson signals policy well positioned as inflation risks persist from Middle East conflict. Dollar supported by steady rate path; EUR/USD vulnerable to widening US-ECB gap.
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Federal Reserve Vice Chair Philip Jefferson said the current stance of US monetary policy remains appropriate, leaving the Fed “well positioned” to respond to incoming data. Speaking at the Bank of Japan-IMES Conference in Tokyo, Jefferson acknowledged that inflation pressures should ease later this year. He warned that risks to the outlook remain skewed higher because of the Middle East conflict and energy disruptions. The United States is a major energy producer, Jefferson noted, it is “not fully insulated” from the war's impact on energy markets.
Jefferson avoided signaling any predetermined move for the June FOMC meeting. He stressed that he had “not prejudged the next meeting.” That language reinforces a data-dependent posture. The Fed is not locked into a cut or a hike. Incoming prints on CPI and employment will drive the rate decision directly.
Jefferson Neutral on June FOMC Bias
Jefferson described the US economy as delivering a solid performance. The labor market is stable with low hiring and firing. Job-market risks, he added, are “tilted to the downside.” The central bank faces a balancing act: inflation risks remain to the upside while growth risks tilt lower. That combination keeps the Fed in a neutral-hold zone. For forex traders, a neutral-sounding Fed reduces the chance of a surprise dovish pivot near term. The dollar stays supported against currencies where central banks are either cutting rates or expected to ease soon.