By Howard Schneider
ATLANTA (Reuters) – Inflation is the most serious problem facing the U.S. Federal Reserve and “may take some time” to address, Federal Reserve Gov. Philip Jefferson said Tuesday in his debut remarks since joining the central bank’s governing body.
“Restoring price stability may take some time and will likely entail a period of below-trend growth,” Jefferson said, joining a current Fed consensus for continued rate increases. “I want to assure you that my colleagues and I are resolute that we will bring inflation back down to 2%…We are committed to taking the further steps necessary.”
Jefferson, an economist and former college administrator, was named to the Fed board by President Joe Biden and confirmed by the Senate in May.
He and two other new governors joined amid one of the most rapid shifts in monetary policy in decades as the Fed raised interest rates from near zero as of May to what is expected to be 4.6% by early next year.
In remarks prepared for delivery to an Atlanta Fed conference, Jefferson said there are reasons to think tight conditions in the labor market may ease – indeed new data on Tuesday showed a sharp drop in job openings in August that began to bring the number of workers sought by companies more in line with the numbers of unemployed.
That could help ease wage growth, Jefferson said, and there were indications as well that “supply bottlenecks have, at long last, begun to resolve,” and could also help ease the pace of price increases.
But it remains uncertain how that will play out, and in the meantime “inflation remains elevated, and this is the problem that concerns me most,” Jefferson said. “Inflation creates economic burdens for households and businesses, and everyone feels its effects.”
(Reporting by Howard Schneider; Editing by Chizu Nomiyama)
