“The current policy remains somewhat restrictive, but we are nearing a neutral level that neither restricts nor stimulates the economy. Thus, it makes sense to proceed slowly as we approach neutral rates,” stated Jefferson during the ‘Euro20+’ conference in Frankfurt, Germany.
The Fed’s vice chairman noted that the 25 basis point interest rate cut was “appropriate” and that downside risks to the labor market have increased.
Philip Jefferson assured that he will continue to assess the macroeconomic scenario and the balance of risks before deciding his vote in future interest rate meetings.
“I always take a meeting-by-meeting approach. This approach is especially prudent,” he mentioned.
On October 29, the Fed reduced the benchmark interest rates by 0.25 percentage points, taking into account the increase in “negative risks to employment in recent months.”
This second rate cut—the first of the year, also of 0.25 points, occurred in September—placed the key rates in a range between 3.75% and 4%.
The decision was not unanimous. Two out of the twelve members of the Federal Open Market Committee (FOMC) voted against the measure, according to the Agence France Presse.
