Fed's Jefferson Says Central Bank Should 'Proceed Slowly' As It Approaches The Neutral Rate

Federal Reserve Vice Chair Philip Jefferson on Friday said that the central bank should now “proceed slowly” as it approaches the neutral rate, following the 25 basis point cut in October.

Speaking at an event in Frankfurt, Jefferson stated that after the 25 bps rate cuts in September and October, the interest rates are now closer to a neutral level than they were before.

“The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy. Given this, it makes sense to proceed slowly as we approach the neutral rate.”

— Philip Jefferson, Vice Chair, Federal Reserve

He added that he supported the October rate cut because the risk of a further slowdown in the labor market had increased. “That step was appropriate because I see the balance of risks as having shifted in recent months as downside risks to employment have increased,” Jefferson said.

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