Federal Reserve Update

(Reuters) – Federal Reserve Vice Chair Philip Jefferson stated on Tuesday that the U.S. central bank's recent half-percentage-point interest-rate cut aimed to maintain a strong labor market amid easing inflation.

Jefferson remarked, "The FOMC has gained greater confidence that inflation is moving sustainably toward our 2% goal," referring to the Federal Open Market Committee, of which he is a member. "To maintain the strength of the labor market, my FOMC colleagues and I recalibrated our policy stance last month."

The Fed's 50-basis-point rate cut during its Sept 17-18 meeting was larger than many expected. In prepared remarks for Davidson College in North Carolina, Jefferson explained that the decision was intended to sustain economic health while still addressing inflation.

"Economic activity continues to grow at a solid pace. Inflation has eased substantially. The labor market has cooled from its formerly overheated state," Jefferson stated.

According to the Fed’s targeted measure, inflation saw a year-over-year change of 2.2% in August, indicating significant progress towards the Fed's 2% goal from 6.5% two years prior.

Jefferson stated, "I expect that we will continue to make progress toward that goal."

Unemployment currently stands at 4.1%, only a slight increase from 3.8% the previous year. Job growth has decelerated, indicating noticeable cooling in the labor market.

Echoing the Fed's recent post-meeting statement, Jefferson noted that he would monitor incoming data, the outlook, and risk balances when contemplating further rate cuts.

"My approach to monetary policymaking is to make decisions meeting by meeting," he conveyed. "As the economy evolves, I will continue to update my thinking about policy to best promote maximum employment and price stability."