NATIONAL NEWS

Little progress has been made in curbing too high inflation, Fed’s Jefferson says

May 12, 2023, 5:17 PM | Updated: 5:36 pm

WASHINGTON (AP) — Federal Reserve governor Philip Jefferson said Friday that inflation remains too high and there has been “little progress” made toward bringing it down to the central bank’s 2% target, a pessimistic assessment given signs in a report earlier this week that price increases might be slowing.

Jefferson, who was nominated by President Joe Biden earlier Friday to the position of Fed vice chair, also said in a speech at the Hoover Institution in California that the turmoil in the U.S. financial system following the failure of three large banks will likely have only a limited impact on the economy.

Jefferson’s potential elevation to the No. 2 spot on the Fed’s seven-member board would give him greater influence over interest rate policy and make him a close colleague of Chair Jerome Powell.

While inflation has declined from its June peak by about 2.75 percentage points to 4.2% in March, compared with a year ago, Jefferson said that “nearly all” of the decline stemmed from falling energy and food prices.

“The bad news is that there has been little progress on core inflation,” he said. Core prices exclude the volatile food and energy categories and are considered to be a better measure of underlying inflation.

Jefferson also cited a closely watched metric often cited by Powell, which tracks the prices of services, from medical care to dining out, while excluding energy and housing costs. That measure “has not shown much sign of slowing,” Jefferson said.

After the Fed’s most recent policy meeting last week, the central bank suggested in a statement that it could pause its interest rate increases at its next meeting in June, after lifting its key rate 10 times in a row. The hikes are intended to slow spending, growth, and inflation.

Jefferson did not hint in his remarks whether he would support such a pause.

Many Fed officials are closely monitoring the impact of 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 reluctant to lend, that could slow the economy and reduce the need for the Fed to lift its key rate.

Jefferson said he expected little impact from the bank failures, saying they will likely have “a mild retardant effect” on the economy, though he added that it is “too early to tell.”

His comments followed a report Wednesday that showed inflation ticked down slightly in April, though remained high. Compared with a year ago, consumer prices rose 4.9%, down from a 5% yearly increase the previous month — lowest year-over-year increase in two years. But that index — the consumer price index — has fallen further than the Fed’s preferred measure, which will be updated May 26.

One of Jefferson’s fellow Fed governors, Michelle Bowman, spoke earlier Friday in Europe and also expressed disappointment with the progress made toward taming inflation so far. She hinted that she might support another rate hike at the June meeting.

“Should inflation remain high and the labor market remain tight,” further rate increases “will likely be appropriate” to lower inflation, Bowman said.

So far, recent inflation and jobs reports “have not provided consistent evidence that inflation is on a downward path.”

Tom Barkin, president of the Federal Reserve Bank of Richmond, on Wednesday also expressed disappointment with stubbornly high levels of inflation in an interview with The Associated 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.”

National News

Associated Press

Florida man arrested, accused of making threats against Trump, Vance on social media

JUPITER, Fla. (AP) — A Florida man accused of making threats against former President Donald Trump, U.S. Sen. JD Vance and their families on social media was arrested on Friday, police said. The Jupiter Police Department said in a news release that officers arrested Michael W. Wiseman on charges of written threats to kill. He […]

46 minutes ago

FILE - Rep. George Santos, R-N.Y., leaves the Capitol after being expelled from the House of Repres...

Associated Press

Judge turns down ex-Rep. George Santos’ request to nix some charges ahead of fraud trial

NEW YORK (AP) — Former U.S. Rep. George Santos on Friday lost a bid to get rid of part of the criminal case against him as he heads toward trial on charges that include defrauding campaign donors. U.S. District Joanna Seybert turned down Santos’ request to dismiss charges of aggravated identity theft and theft of […]

1 hour ago

Associated Press

A judge adds 11 years to the sentence for a man in a Chicago bomb plot

CHICAGO (AP) — A man convicted of plotting to blow up a Chicago bar will have to spend another 11 years in prison. U.S. District Judge Matthew Kennelly resentenced Adel Daoud to 27 years in prison on Friday, the Chicago Tribune reported. U.S. District Judge Sharon Johnson Coleman originally sentenced Daoud to 16 years in […]

2 hours ago

FILE Opponents to an immigration proposal gather inside the Arizona State Capitol, Tuesday, June 4,...

Associated Press

Legal fight continues with appeals over proposed immigration initiative for Arizona Nov. 5 ballot

PHOENIX (AP) — The fight to keep a proposed border initiative off Arizona’s Nov. 5 ballot is not over yet. Immigrant advocates kept the issue alive this week by filing notice to the state Supreme Court that they will appeal the judge’s ruling. A Maricopa County Superior Court judge on July 12 rejected an effort […]

2 hours ago

Associated Press

Lawsuit filed over Alabama law that blocks more people with felony convictions from voting

MONTGOMERY, Ala. (AP) — A voting rights group says a new Alabama law that expanded the list of felonies that cause a person to lose their right to vote is “out of step” with what is happening in most of the nation on voting rights for formerly incarcerated people. The Campaign Legal Center filed the […]

3 hours ago

FILE - American Airlines planes wait at gates at Phoenix Sky Harbor International Airport Friday, J...

Associated Press

American Airlines has a contract deal with flight attendants, and President Biden is happy about it

FORT WORTH, Texas (AP) — American Airlines and the union representing its flight attendants said Friday they have reached agreement on a new contract that includes pay raises, and President Joe Biden said the deal avoids a strike that would have hurt the U.S. economy and consumers. Terms of the proposal were not disclosed. The […]

3 hours ago

Little progress has been made in curbing too high inflation, Fed’s Jefferson says