Fed Keeps Policy Rate at 3.5%-3.75% as Vice Chair Highlights Global Risks
The Federal Reserve's decision, announced May 27, 2026, keeps the federal funds rate at 3.5%-3.75% affecting banks, borrowers and markets immediately.
Vice Chair Philip N. Jefferson told the Bank of Japan-Institute for Monetary and Economic Studies Conference in Tokyo on May 27, 2026 that the Federal Open Market Committee, in its late-April meeting, decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent. The stance, he said, positions the Fed to respond to incoming data while pursuing its dual-mandate goals.
Jefferson identified three global developments he is monitoring: a significant rise in energy prices linked to the Middle-East conflict, rapid advancement of artificial-intelligence technology, and ongoing disruptions to trade flows that began during the pandemic. He noted that higher crude-oil prices pose downside risks to growth and upside risks to inflation, especially for net-energy-importing economies such as Japan.
Turning to the United States, Jefferson described recent growth as solid but forecast a more modest pace this year as households contend with elevated energy costs. He said the labor market remains broadly stable, with hiring and firing at relatively low levels, though downside risks to employment exist. Disinflation stalled over the past year, largely because of increased tariffs, and inflation rose in recent months due to higher energy costs.
The Vice Chair reaffirmed the Fed's commitment to returning inflation to its 2 percent target, consistent with the dual-mandate of price stability and maximum employment. He indicated that the current policy stance leaves the Committee well positioned to adjust as the outlook evolves, without prejudging the next meeting.
Jefferson concluded by thanking the audience and expressing anticipation for further discussion on the issues raised.