Fed's Jefferson says jobs market is stabilizing and inflation should moderate

Jefferson's Economic Outlook

Fed's Jefferson presents a cautiously optimistic view of the stability in the U.S. job market and moderating inflation. He stated, 'Our current monetary policy is well positioned for what is likely ahead,' emphasizing that future moves will be driven by data and economic outlook.

Current Economic Conditions and Future Outlook

Jefferson also highlighted the importance of maintaining leeway for the supply side of the economy. A strong commitment to price stability reduces inflation risks, particularly noting that tariffs were a significant driver of inflation in 2025, with expectations for easing price pressures in 2026.

Balancing Inflation and Job Market

He indicated that the Personal Consumption Expenditures (PCE) price index might rise by 2.9% year-over-year in December. The job market is described as being in a 'low-hire, low-fire' environment. He predicts the economy will grow by 2.2% this year, stressing that the forthcoming non-farm payrolls report will be crucial for market expectations regarding interest rates. These statements help remove uncertainties in the U.S. economy, with traders needing to focus on the direction of interest rate policies. The market is currently pricing in a 20% chance of a Fed cut in March, influenced significantly by the upcoming employment report.