- Expect disinflation to resume after this year
- Growth to remain around 1.5% for the rest of 2025
- Impact of administration policy is still evolving
- Consider uncertainty around baseline outlook as especially high
- If labour force growth continues to slow it will impact potential GDP and influence the output gap
- Do not need to see additional softening in the labour market
- Uncertain where the neutral rate is
- Neutral rate is a valuable concept, but have to embrace uncertainty and need to move deliberately
- The last cut moved the US toward the neutral rate, but can't say more about the level of restrictiveness
- Haven't given thought to whether to stay on as a Fed governor after term as Vice Chair ends (ends in 2027)
- Keeping focus on the economy and making the best decisions
- Question of governor role is an issue for far into the future
- Balance sheet continuing to shrink in an orderly way
- Ultimate level of ample reserves is a decision for the FOMC it its entirety
We haven't got monetary policy or economic outlook comments from Jefferson for months, as far as I remember. I think these comments put him in the neutral camp, so two more rate cuts this year as projected in the dot plot. Again, it's all about the labour market now. As long as they see bigger downward risks for employment than upward risks for inflation, they will move towards the neutral rate (expected to be around 3%).
