Fed Vice Chairman Jefferson comments on interest rates

Fed Vice Chairman Philip Jefferson said the central bank should be careful about further increases in the benchmark federal funds rate, adding that “we are in a delicate period of risk where we need to balance the risk of not tightening enough against the risk of policy being too restrictive.” Fed Vice Chairman Philip Jefferson said he is watching the rise in U.S. Treasury yields as a potential constraint on the economy, even if the inflation rate remains too high. “We are in a delicate period of risk management where we have to balance the risk of not tightening enough against the risk of policy being too restrictive,” Jefferson said at the National Association for Business Economics conference in Dallas on Monday. “We will continue to be aware of and keep in mind the tightening in financial conditions through higher bond yields.” After raising the benchmark federal funds rate by more than 5 percentage points over the past year and a half, he said a majority of officials at their September policy meeting would see fit to raise it by another quarter point by the end of 2023. U.S. government 10-year yields have risen about 40 basis points since the September meeting. Fed officials, including Mary Daly of San Francisco and Lorie Logan of Dallas, have said the recent tightening in financial conditions could replace additional rate hikes.