• The Federal Reserve needs to be on guard against cutting interest rates too far in response to falling inflation lest it undermine the achievement of its ultimate goal of price stability, Vice Chair Philip Jefferson said on Thursday.
• “We always need to keep in mind the danger of easing too much in response to improvements in the inflation picture,” he said in a speech prepared for delivery to the Peterson Institute for International Economics. “Excessive easing can lead to a stalling or reversal in progress in restoring price stability.”
• Jefferson, who as vice chair is a key messenger for Chair Jerome Powell, voiced cautious optimism that inflation is headed lower despite a blip in January and said the Fed is likely to begin cutting interest rates later this year. The remarks echoed recent comments from other Fed officials suggesting the US central bank is in no rush to lower borrowing costs.