Fed Vice Chair Jefferson says inflation remains high and urges patience on rate hikes

Federal Reserve Vice Chairman Philip Jefferson told a speech at the University of Virginia that inflation has stayed too high for too long, but the Fed must wait for more data before judging whether it will fall quickly enough. He noted that bond yields have risen since the September meeting, reflecting investors’ reassessment of the macroeconomic outlook, and said the board will need additional time to form its own judgment.

Jefferson said the economy is facing a “cascade of shocks,” including higher energy prices, rapid AI investment and trade-policy changes, and that the Fed cannot treat each factor in isolation. He emphasized that any future rate adjustments will depend on trends in the data, the evolving outlook, and the balance of risks to inflation and employment.

He reiterated support for the September rate increase, describing it as a step to keep longer-term inflation expectations anchored and to reassure the public about achieving the 2% target. Jefferson warned of upside risks from geopolitical developments and stronger-than-expected demand, and said higher energy prices could cause a more persistent rise in inflation.

His comments contrast with some colleagues who have called for additional hikes, and align with New York Fed President John Williams, who also said there is no urgency to act. Markets have taken the remarks as a signal that the Fed is unlikely to raise rates again this month, pushing the next possible move to the December meeting.