Fed Vice Chair Jefferson: Slow approach to cuts makes sense as policy rate approaches neutral

By Howard Schneider

WASHINGTON (Reuters) -The Fed should “proceed slowly” in approving further interest rate cuts as monetary policy moves closer to a neutral stance, Fed Vice Chair Philip Jefferson said on Friday.

Following a quarter-point rate cut last week, which Jefferson supported, he said “the current policy stance is still somewhat restrictive,” and serving to push down inflation that available information suggests has not changed much since last year and remains above the U.S. central bank’s 2% target.

But the benchmark policy rate, currently set in the 3.75% to 4% range, is now “closer to its neutral level that neither restricts nor stimulates the economy,” Jefferson said in remarks prepared for delivery at Germany’s Bundesbank. “Given this, it makes sense to proceed slowly as