09:34 AM EDT, 05/14/2025 (MT Newswires) -- Monetary policy is in a good position to deal with the possible inflation impacts of the Trump Administration's tariff plans, Federal Reserve Vice Chair Philip Jefferson said Wednesday at New York Fed's Annual Conference of Second District Directors and Advisors.

"If the increases in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation," Jefferson said. "Whether tariffs create persistent upward pressure on inflation will depend on how trade policy is implemented, the pass-through to consumer prices, the reaction of supply chains, and the performance of the economy."

Jefferson noted that short-term inflation expectations have risen, but long-term expectations have been little changed, reflecting the Fed's commitment to act as needed to bring down inflation. However, uncertainty remains regarding other government policy changes, particularly immigration and regulatory policy and the Fed will need to be careful when making decisions.

"With respect to the path of the policy rate going forward, I will carefully assess incoming data, the evolving outlook, and the balance of risks," Jefferson said, particularly signs that consumer sentiment continued to weaken.

"Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people," Jefferson said. "With the increased risks to both sides of our mandate, I believe that the current stance of monetary policy is well positioned to respond in a timely way to potential economic developments."