Fed Vice Chair Jefferson Stresses Clear Communication on 2% Inflation Goal

At the 2026 Bank of Japan-Institute for Monetary and Economic Studies Conference in Tokyo, Federal Reserve Vice Chair Jefferson said policymakers must clearly communicate and reinforce the Fed’s commitment to returning inflation to its 2% target. He said higher energy prices tied to the Middle East conflict, increased tariffs, advances in artificial intelligence, and disrupted trade flows since the pandemic are shaping the U.S. outlook. Jefferson said disinflation stalled over the prior year largely because of tariffs and that inflation moved notably higher in recent months because of rising energy costs, while U.S. growth has been solid but is likely to moderate and the labor market remains broadly stable with downside risks. He noted the Federal Open Market Committee left the federal funds rate unchanged at 3.5% to 3.75% at its late-April meeting. Separately, John Williams said monetary policy is in a good place, that inflation must clearly return to 2%, and that future policy decisions will depend on incoming data, the economic outlook, and risks, while warning that war-related supply chain disruptions remain a concern. In additional remarks, Federal Reserve’s Schmid said inflation has remained above the 2% target for more than five years and that officials must signal readiness to take all necessary steps to restore price stability, while noting the U.S. labor market is now balanced.