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A12 BUSINESS
Monday 15 May 2023
Little progress has been made in curbing

too high inflation, Fed’s Jefferson says

Fed report showed that
banks have been pulling
back on lending for months
and slightly accelerated
that tightening in the wake
of the bank failures.
If banks become more re-
luctant to lend, that could
slow the economy and re-
duce the need for the Fed
to lift its key rate.
Jefferson said he expected
little impact from the bank
failures, saying they will like-
Philip Jefferson, nominee to be a member of the Federal Reserve ly have "a mild retardant
Board of Governors, testifies during a Senate Banking, Housing effect" on the economy,
and Urban Affairs Committee confirmation hearing on Thursday,
Feb. 3, 2022, in Washington. though he added that it is
Associated Press "too early to tell."
His comments followed a
By CHRISTOPHER RUGABER said that "nearly all" of the report Wednesday that
AP Economics Writer decline stemmed from fall- showed inflation ticked
WASHINGTON (AP) — Fed- ing energy and food prices. down slightly in April,
eral Reserve governor Phil- "The bad news is that there though remained high.
ip Jefferson said Friday that has been little progress Compared with a year
inflation remains too high on core inflation," he said. ago, consumer prices rose
and there has been "little Core prices exclude the 4.9%, down from a 5% year-
progress" made toward volatile food and energy ly increase the previous
bringing it down to the cen- categories and are consid- month — lowest year-over-
tral bank's 2% target, a pes- ered to be a better mea- year increase in two years.
simistic assessment given sure of underlying inflation. But that index — the con-
signs in a report earlier this Jefferson also cited a sumer price index — has
week that price increases closely watched metric of- fallen further than the Fed's
might be slowing. ten cited by Powell, which preferred measure, which
Jefferson, who was nomi- tracks the prices of servic- will be updated May 26.
nated by President Joe es, from medical care to One of Jefferson's fellow
Biden earlier Friday to the dining out, while excluding Fed governors, Michelle
position of Fed vice chair, energy and housing costs. Bowman, spoke earlier
also said in a speech at the That measure "has not Friday in Europe and also
Hoover Institution in Califor- shown much sign of slow- expressed disappointment
nia that the turmoil in the ing," Jefferson said. with the progress made
U.S. financial system follow- After the Fed's most recent toward taming inflation
ing the failure of three large policy meeting last week, so far. She hinted that she
banks will likely have only the central bank suggest- might support another rate
a limited impact on the ed in a statement that it hike at the June meeting.
economy. could pause its interest rate "Should inflation remain
Jefferson's potential eleva- increases at its next meet- high and the labor market
tion to the No. 2 spot on the ing in June, after lifting its remain tight," further rate
Fed's seven-member board key rate 10 times in a row. increases "will likely be ap-
would give him greater in- The hikes are intended to propriate" to lower infla-
fluence over interest rate slow spending, growth, and tion, Bowman said.
policy and make him a inflation. Jefferson did not So far, recent inflation and
close colleague of Chair hint in his remarks whether jobs reports "have not pro-
Jerome Powell. he would support such a vided consistent evidence
While inflation has declined pause. Many Fed officials that inflation is on a down-
from its June peak by about are closely monitoring the ward path."
2.75 percentage points to impact of the failure of Tom Barkin, president of
4.2% in March, compared three large banks in the the Federal Reserve Bank
with a year ago, Jefferson past two months. A recent of Richmond, on Wednes-
day also expressed disap-
pointment with stubbornly
high levels of inflation in an
interview with The Associ-
ated Press.
Core inflation has been
stuck in a range of 0.3%-
0.5% for months, Barkin
said, "where you'd really
like it to be moving down
and in concert with our
target."q