Fed’s Jeffereson: Some components of inflation have proved persistent, lowering them will take time
Federal Reserve Governor Philip Jefferson said on Monday, per Reuters, “Fed is ‘still learning’ how much impact its interest rate increases have had on the economy and inflation.”
“Inflation ‘has started to come down,’ with some of that due to tighter monetary policy and some due to other factors such as improving global supply chains,” Fed’s Jefferson said in remarks prepared for delivery at an event at Washington and Lee University.
Additional comments
Inflation "should fall back" toward the Fed's 2% target as higher interest rates discourage spending in interest-rate sensitive sectors of the economy like housing
Inflation "has started to come down" with some of that due to tighter monetary policy and some due to other factors such as improving global supply chains
"monetary policy affects the economy and inflation with long, variable, and highly uncertain lags, and we are still learning about the full effect of our tightening thus far
did not comment on recent bank stress
did not provide his views about whether the Fed should continue raising interest rates at upcoming meetings
Following the comments, the policymaker also replies to the questions as follows:
Q&A response
Inflation has been longer lasting and current rate is too high.
Want to return to 2% sooner rather than later; don't want expectations to become embedded.
Some components of inflation have proved persistent, lowering them will take time.
Would like to say inflation will return to 2% soon, but have to avoid damaging the economy ‘any more than is necessary’.
Fed actions in recent weeks has aimed to show depositors there is ‘someone out there willing to lend’.
Fed wants banks that need liquidity to feel its okay to use the discount windown.
recent rise in discount window lending is appropriate at the moment.