Federal Reserve Vice Chair Philip Jefferson stated that inflation is expected to cool later this year as the impacts of rising tariffs and energy costs gradually subside; however, he cautioned that inflation risks remain skewed to the upside. Jefferson is scheduled to speak Thursday morning at a conference hosted by the Bank of Japan in Tokyo. In his prepared remarks, he indicated he is closely monitoring whether the increase in energy costs due to the Iran war will dampen consumer spending. He also warned that he continues to see signs of weakness in the labor market. Jefferson reiterated his view that the Fed's current policy stance is well-positioned to respond to any developments. At last month's meeting, the Federal Reserve kept its benchmark interest rate unchanged in the range of 3.5% to 3.75%. "I believe this policy stance allows us to respond well to economic dynamics based on the latest data, the evolving economic outlook, and the balance of risks," Jefferson said. "I am not pre-judging the next meeting and look forward to discussing with my colleagues the policy needed to achieve our dual mandate goals." The Federal Reserve's meeting on June 16-17 will be the first chaired by the new Chair, Kevin Warsh.
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