Federal Reserve Governor and vice-chairman candidate Philip Jefferson began recording concerns about economic developments in the US. He informed that progress on inflation may be slowing but it is also too early in the policy tightening process to assess the full impact of the rapid rate hikes approved by the central bank so far.
Inflation "is still too high, and by some measures progress has slowed," Jefferson said. Apart from energy and food, inflation progress remains a challenge as there are no signs of a significant slowdown in a broad set of services outside of housing, a large part of the economy where prices have risen rapidly.
He also informed that the economy has "deteriorated significantly" this year. Although his baseline forecast does not include a recession, he said he expects job growth to slow and the unemployment rate to likely rise over time.
And there may be more impact to come from the Fed's rate hikes so far, as well as possible "downside risks" from recent pressures in the banking industry, he said.
Jefferson did not indicate a preference for keeping rates steady or pursuing further rate hikes at the June meeting.
"History shows that monetary policy works with long and variable lags, and one year is not long enough".
