Fed Vice Chair Jefferson: Rate-Cut Outlook Higher, Policy in Neutral Range (2/6/2026)

Federal Reserve Vice Chair Philip Jefferson said in a Brookings Institution speech (February 6, 2026) that the Fed’s benchmark interest rate is “broadly in the neutral range,” with a higher bar for additional rate cuts. He expects the labor market to remain roughly in balance with unemployment near 4.4%, and GDP growth of about 2.2% in 2026. Core PCE inflation is estimated at 3% by year-end, down from above-target levels, with downward pressure from falling services prices and productivity gains. He cautioned inflation could rise, emphasizing the need to keep policy on a disinflation path. Other Fed speakers expressed caution: San Francisco Fed President Mary Daly highlighted a disconnect between business hiring optimism and workers’ concerns, and Governor Lisa Cook said risks are tilted toward higher inflation, signaling a preference for maintaining the current stance until inflation trends move sustainably toward 2%.