Federal Reserve Vice Chair Philip N. Jefferson said inflation’s direction should weigh more heavily in future U.S. rate decisions, leaving the timing and size of any policy change open.
Speaking at the University of California, San Diego Economic Roundtable on Nov. 13, Jefferson described price pressures as persistent. “I see the trajectory of inflation as providing the more important signal,” he said. Any policy adjustment, he added, should account for data trends, the outlook and the balance of risks. He said his remarks represented his own views, not necessarily those of his Federal Reserve Board colleagues or the Federal Open Market Committee (FOMC).
The FOMC kept its federal funds target range at 3.75% to 4.00% at its Oct. 27-28 meeting, voting 10-2. FOMC members Lisa D. Cook and Beth M. Hammack dissented in favor of a 25-basis-point increase.
The latest personal consumption expenditures (PCE) data showed prices rose 3.6% in the 12 months through September, while the core index, which excludes food and energy, increased 3.1%, the Bureau of Economic Analysis (BEA) reported. October’s Consumer Price Index (CPI) rose 0.4% from September on a seasonally adjusted basis, and core CPI gained 0.3%, the Bureau of Labor Statistics (BLS) said. The BLS did not publish most year-over-year October comparisons because October 2025 survey data were unavailable after a lapse in appropriations.
The BEA’s advance estimate showed real gross domestic product grew at a 3.4% annual rate in the third quarter of 2026. Separately, the BLS reported that the unemployment rate was 4.1% in October 2026 and payroll employment increased by 165,000.
Jefferson said data-center investment and stronger household spending were adding to demand and price pressures. Firms that use new technology successfully could gain a competitive edge, he said, while companies that lag risk threats to their viability. Workers could face displacement if AI handles tasks faster than they can retrain; Jefferson said monetary policy cannot resolve mismatches between workers’ skills and employers’ needs.
As a historical comparison, Jefferson said investment in computers, software and communications equipment lifted annual labor-productivity growth by about three-quarters of a percentage point in the late 1990s. He said broader productivity gains could emerge, but their scale and timing remain uncertain. The BEA is scheduled to release October PCE data at 8:30 a.m. ET on Nov. 25. The FOMC’s next meeting is set for Dec. 8-9.
