Federal Reserve Vice Chair Philip Jefferson acknowledged that recent inflation readings have shown improvement but warned that newly imposed tariffs could reverse that progress.
Although April’s CPI figures were softer than expected, Jefferson warned that sustained import taxes have the potential to push inflation higher for a time and could also weigh on economic activity. He noted that shifts in trade costs can feed into prices and margins, affecting both producers and consumers.
Jefferson stressed the importance of a steady, data-driven approach to interest rate policy. He described current policy rates as “well positioned” to address emerging risks, but made clear that the Fed will remain attentive and ready to adjust policy if incoming data indicate a need to tighten or ease.
Indicators of business and consumer sentiment have weakened recently, prompting the Fed to watch closely for signs of an economic slowdown. Jefferson pointed out that lower confidence can translate into reduced spending and investment, which would affect growth and labor market conditions.
Overall, Jefferson’s remarks combined cautious optimism about the recent easing in inflation with a reminder that risks — including tariffs and slower demand — could alter the outlook. The Fed’s strategy, he said, will continue to rely on careful monitoring of price trends, labor market signals, and financial developments to guide future policy decisions.