Federal Reserve Vice Chair Jefferson Advocates for Economic Support Amid Labor Market Concerns

HELSINKI—U.S. Federal Reserve Vice Chair Philip Jefferson expressed concerns about the weakening U.S. labor market during his address at the Bank of Finland International Monetary Policy Conference on September 30, 2025. He emphasized the necessity of central bank support to mitigate potential economic stress.

Jefferson highlighted that without intervention, the labor market could experience additional strain. He supported the Federal Reserve's recent decision to reduce its policy rate by a quarter percentage point during the September 16–17 meeting, placing the benchmark rate in the 4.00% to 4.25% range. This move marked the first rate adjustment since December 2024.

"The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market," Jefferson stated. "The downside risks to employment appear to have risen."

The Federal Open Market Committee (FOMC) voted 11-to-1 in favor of the rate cut, with Governor Stephen Miran dissenting, advocating for a more aggressive half-point reduction. The committee's decision reflects a shift in focus from inflation concerns to addressing potential economic softening. Projections indicate two more rate cuts before the end of the year.

Jefferson projected that U.S. economic growth would continue at approximately 1.5% for the remainder of 2025. He also noted that inflation is expected to gradually return to the Federal Reserve's 2% target starting next year.

Addressing uncertainties in the economic outlook, Jefferson pointed to new policies under President Donald Trump's administration, particularly regarding trade and immigration. He observed that while the impact of tariffs on inflation has been milder than some economists predicted, these effects are anticipated to become more pronounced in the coming months.

"Uncertainty about the economic outlook remains elevated," Jefferson remarked. "The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen."

The Federal Reserve's recent policy actions underscore its proactive approach to balancing inflation risks with labor market concerns. The anticipated rate cuts aim to provide support to the economy amid evolving challenges posed by new trade and immigration policies.

Jefferson's address provides valuable insights into the Federal Reserve's current assessment of the U.S. economy and its strategic approach to emerging challenges.