Fed may need to hike rates if inflation does not ease soon, Jefferson says

The Fed next meets to decide rates on July 28-29. After government data published this week showed consumer price inflation had cooled in June, traders have largely exited any expectation for a rate hike this month.

Even so, policymakers are wary of banking too heavily on one month of improvement after months when inflation moved in the wrong direction. A few feel a rate hike is already called for, notably Dallas Fed President Lorie Logan in remarks made earlier Thursday. That will set up a vigorous debate around the table in Washington in two weeks.

Jefferson made clear he is not in that hawkish camp, calling current Fed policy "well positioned," a phrase often employed by central bankers to signal they do not see an urgent need to change policy. But his remarks were notably weighted more heavily with concern around inflation than around the labor market, which has been stable.