Fed's Jefferson Says 'Under No Illusion' Bringing Inflation Back Down To 2% Will Be Easy: 'Committed To Doing What It Takes'

Federal Reserve Governor Philip Jefferson said on Monday he was under no illusion that it’s going to be easy to bring the inflation rate back down to 2%.

“There’s a lot of resolve on the part of the [Federal Open Market] Committee. I know that I am committed to doing what it takes,” Jefferson said, according to a Reuters report.

He pointed out that core goods inflation has started to come down and that several indicators suggest housing services inflation is likely to come down in the coming months.

"There is more uncertainty surrounding inflation in core services excluding housing,” Jefferson said in his remarks to a Harvard University economics class, according to the report.

Also Read: How To Invest In Startups

“The inflation outlook for this non-housing category of core services partly depends on whether growth in nominal labor costs comes back down, and recent data suggest that labor compensation has indeed started to decelerate somewhat over the past year,” he said.

PCE Index: Jefferson did acknowledge that the Personal Consumption Expenditures price index, which the central bank uses to set its inflation target, remained “elevated.” The headline PCE rose 5.4% in January on a year-over-year basis. That’s up from 5.3% in December and a 2022 high of 7% in June.

Following the release of strong economic data, markets last week witnessed their worst session in 2023. The SPDR S&P 500 ETF Trust SPY closed 2.67% lower for the week while the Invesco QQQ Trust Series 1 QQQ lost 3.09%.

The Fed will meet next on March 21-22 and is expected to announce a 25 basis points hike with new projections about policy for the rest of the year.

Read Next: Tesla, Apple, AMC, Occidental Petroleum, Zoom: Why These 5 Stocks Are Drawing Investors’ Attention Today