By CultureBanx Team
- Federal Reserve Governor Philip Jefferson has been nominated to be the U.S. central bank’s vice chair, a key policy advisory role
- The current Federal Funds Rate is just over 5%
President Joe Biden has nominated Federal Reserve Governor Philip Jefferson to be the U.S. central bank’s vice chair, a key policy advisory role. He would become the second-ever Black vice chair. With three current African Americans having a direct say on U.S. monetary policy including Atlanta Fed President Raphael Bostic, Federal Reserve Governor Lisa Cook and Jefferson, will 40 year ultra-high inflation finally get under control.
Why This Matters: Jefferson has offered limited views on monetary policy in the public sphere. Also, he has voted in favor of each of the eight interest rate increases the Fed has delivered since he joined the seven-member board after an easy Senate confirmation in May 2022.
After just over a year of the steepest round of interest-rate hikes in 40 years, the Fed on May 3 nudged its policy rate to just over 5% and signaled it may be time to take a pause and assess whether any more hikes are needed.
Central bankers want policy tight enough to bring down inflation, now running at more than twice their 2% goal, but not so tight it craters a labor market that so far has weathered the steeper borrowing costs with surprising strength. Finding that balance will be a tricky task.
AfterJefferson’s nomination, he defended the central bank’s inflation fight, declaring policy to be “on track” and promising to pursue both of the Fed’s goals, including full employment, with seriousness and humility.
While inflation has declined from its June peak by about 2.75 percentage points to 4.2% in March, compared with a year ago, Jefferson said that “nearly all” of the decline stemmed from falling energy and food prices.
Situational Awareness: The Fed vice chair typically works closely with the Fed chair and the New York Fed president, currently John Williams, as a “troika” who formulate policy options that feed into rate-setting decisions made twice a quarter by the Fed’s 19 policymakers.
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