The vice president of the North American Federal Reserve (Fed), Philip Jefferson, said this Friday, 7th, that interest rates are approaching a “neutral level”, but insisted that it is necessary to remain cautious.
“Current policy remains somewhat restrictive, but we are moving it closer to the neutral level, which neither restricts nor stimulates the economy. Therefore, it is logical to proceed slowly as we approach neutral rates,” said Jefferson, who was speaking at the ‘Euro20+’ conference in Frankfurt, Germany.
The vice president of the Fed pointed out that the 25 basis point cut in the interest rate was “appropriate” and that the downside risks for the labor market increased.
Philip Jefferson assured that he will continue to evaluate the macroeconomic scenario and the balance of risks before determining his vote in future meetings on interest rates.
“I always adopt a meeting-by-meeting approach. This approach is especially prudent,” he said.
On October 29, the Fed reduced reference interest rates by 0.25 percentage points, taking into account the increase in “downside risks to employment in recent months”.
This second interest rate cut – the first of the year, also of 0.25 points, occurred in September – placed key rates in a range between 3.75% and 4%.
The decision will not have been unanimous. Two of the twelve members of the Federal Open Market Committee (FOMC) voted against the measure, reported Agence France Presse.