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Fed's Jefferson says he is focusing on inflation as US labour market 'very resilient'
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Fed's Jefferson says he is focusing on inflation as US labour market 'very resilient'
May 27, 2026 8:57 PM

TOKYO, May 28 (Reuters) - Federal Reserve Vice Chair Philip Jefferson said on Thursday it was appropriate to focus on returning inflation to the central bank's 2% target given the U.S. labour market has been "very resilient" to the current energy shock.

"When I'm thinking about my policy decision meeting by meeting, I'm absolutely focused on price stability, but by mandate I also need to keep in mind what's happening in the labour market," Jefferson said during a question and answer session after a speech at a conference hosted by the BOJ and its think tank in Tokyo.

"The U.S. labour market has been very resilient to the current shock. Given that resiliency, it seems appropriate that the focus will be on returning inflation to 2%," he said.

Jefferson's comments were his first since last Friday's swearing in of Kevin Warsh as the Fed's new chair. 

Jefferson said it was difficult to say "moment by moment" what exactly the Fed's rate policy could be given the uncertainty over the extent and duration of the war-induced energy shock.

"What all segments of society are noticing is increasing energy and gasoline prices in particular. We are sensitive to how that's impacting the lives of everyday people," he said.

But the challenge for the U.S. economy was that aside from the fallout from the energy shock, expanding AI investment was boosting growth, he said.

"The energy shock is a headwind for growth, but we are still having growth during this episode," Jefferson said. "In terms of monetary policy communication, the emphasis has been on monitoring the second-round effect associated with supply shocks and a surge in investment demand."

In his prepared remarks to the conference, he said the current setting of monetary policy is in the right place amid ongoing upside risks to the inflation outlook.

"I have not prejudged the next meeting and look forward to engaging with my colleagues about the policy necessary to best achieve our dual-mandate goals," he said about the next Federal Open Market Committee meeting on June 16-17.

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