Federal Reserve Vice Chairman Jefferson: The U.S. job market is weakening and may come under pressure without policy support
Federal Reserve Vice Chairman Philip Jefferson stated that the U.S. economy is expected to grow at a rate of about 1.5% for the remainder of this year, but the labor market may face pressure without policy support. He supports a 25 basis point rate cut at the September policy meeting to address the risks of inflation and the labor market. Jefferson also mentioned that the current labor market is gradually softening, and the impact of policies will become more evident in the coming months
According to the Zhitong Finance APP, Federal Reserve Vice Chairman Philip Jefferson stated on Monday that he expects the U.S. economy to continue growing at a rate of about 1.5% for the remainder of this year; without support from Federal Reserve policies, the labor market may face pressure.
In a speech prepared for the Bank of Finland's Helsinki conference, Jefferson indicated his support for a 25 basis point rate cut at the Federal Reserve's policy meeting on September 16-17. This move aims to balance the risks of "inflation remaining persistently above target levels" with the observed situation of "increasing threats to the labor market."
"The current labor market is gradually softening, which means that without support, the labor market may encounter pressure," Jefferson stated, adding that he also expects U.S. inflation to begin to decline to the Federal Reserve's 2% target level after this year.
Jefferson mentioned that the impacts of the trade, immigration, and other policies of the Donald Trump administration are still evolving. He added, "I believe that my baseline outlook faces extremely high uncertainty, primarily due to the new policies being implemented by the current U.S. government and their potential impacts on employment and inflation."
Although the impact of tariffs on inflation and other areas of the economy is lower than some economists had expected, Jefferson believes that these effects "will become more apparent in the coming months."
At the last policy meeting, the Federal Reserve lowered the benchmark interest rate to a range of 4% to 4.25%, marking the first rate adjustment since December of last year. Forecasts released after the meeting indicated that policymakers expect to cut rates two more times for the remainder of this year
