Fed's Jefferson Says Both Sides of Mandate Are Under Pressure

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00:00I see risk to employment as tilted to the downside and risk to inflation to the upside.

00:08It follows that both sides of our mandate are under pressure.

00:15While tariff-related inflation is apparent in the prices of some goods, it is also notable

00:23that it so far has been lower than what many forecasters predicted this spring.

00:31Several factors, including the final tariff rates, the extent of pass-through to consumer prices,

00:41the effects on supply chains, overall economic conditions, and what happens to longer-run inflation expectations

00:49will influence the scope and persistence of the related rise in inflation.

00:57Short-term inflation expectations have come down from the peaks reached in the second quarter,

01:03and most measures of longer-run inflation expectations have been largely stable,

01:10suggesting that the American people understand our commitment to returning inflation to our 2% target.

01:19As such, I expect the disinflationary process to resume after this year,

01:26and inflation to return to our 2% target in the coming years.

01:36With the unemployment rate at 4.3%, the labor market is softening,

01:43which suggests that, left unsupported, it could experience stress.

01:48To balance the risk of persistent above-target inflation and the risk of a deteriorating labor market,

01:58I supported a 25 basis point cut in our target range at the last FOMC meeting.

02:07This change moved our policy rate closer to a more neutral stance,

02:13while maintaining a balanced approach to promoting our dual mandated objectives.

02:23With respect to the path of the policy rate going forward,

02:28I will continue to evaluate the appropriate stance of monetary policy

02:32based on incoming data, the evolving outlook, and the balance of risks.

02:39I will also consider and assess information about government policies

02:46and their effects on the economy.