May 27 (Reuters) - Federal Reserve Vice Chair Philip Jefferson said on Wednesday that the current setting of monetary policy is in the right place amid ongoing upside risks to the inflation outlook.

The current setting of the federal funds target rate range, at between 3.5% and 3.75%, leaves the central bank "well positioned to respond to economic developments based on the incoming data, the evolving outlook, and the balance of risks," Jefferson said in the text of a speech to be delivered before the 2026 Bank of Japan-Institute for Monetary and Economic Studies Conference in Tokyo.

Jefferson, the central bank's second-in-command, stopped short of saying what's next for interest rate policy, noting that when it comes to the June 16-17 Federal Open Market Committee meeting, "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."

Jefferson's comments were his first since last Friday's swearing in of Kevin Warsh as the Fed's new chair, succeeding Jerome Powell, who will stay on for a time as a governor.

Warsh, formerly hawkish, expressed strong interest in cutting interest rates as he sought the Fed's top job, although few think he'll be able to do that this year given the surge in inflation tied to President Donald Trump's import tax hikes and his war in the Middle East.

Jefferson noted in his speech that while the U.S. produces a substantial amount of oil it is not fully insulated from the energy disruptions the war has created. Jefferson expects inflation pressures to wane later this year but said there are upside risks to this outlook.

He  said the U.S. economy is turning in a solid performance amid a stable job market defined by low hiring and firing. He added job market risks are tilted to the downside.