By Howard Schneider WASHINGTON (Reuters) -Federal Reserve Vice Chair Philip Jefferson said on Monday the U.​S. central bank needs to "proceed slowly" ‌with any further interest rate cuts as it eases policy towards a level ‌that would likely stop putting downward pressure on inflation. In remarks prepared for delivery at a Kansas City Fed event, Jefferson said he agreed the central bank's quarter-percentage-point rate cut last ⁠month was appropriate, ‌given increased risks to the job market and the likeli ...

Core Viewpoint - The Federal Reserve is divided on interest rate cuts, with a consensus leaning towards further reductions in 2025, despite ongoing concerns about inflation [1][2][5]. Group 1: Interest Rate Decisions - The Federal Reserve decided to cut rates by a quarter point during its last meeting, marking the first reduction of 2025 [1]. - A median of two more cuts is anticipated this year, although some members suggest fewer cuts may occur, while at least one member sees the possibility of more than two cuts [7]. Group 2: Inflation Concerns - Most officials expressed concerns about inflation, indicating that risks remain regarding its persistence and the impact of tariffs [5]. - Some officials noted a decrease in perceived upside risks to inflation compared to earlier in the year, but there is still anxiety about long-term inflation expectations if the 2% target is not met [3][6]. Group 3: Labor Market Assessment - Officials did not observe a sharp deterioration in labor market conditions, attributing lower job gains to a decline in both supply and demand for workers [6]. - The Fed justified the rate cut by citing increased risks to the job market, although there remains a significant focus on inflation [5]. Group 4: Balance Sheet Management - Policymakers emphasized the importance of monitoring money market conditions closely as reserves are expected to decline further [7]. - Fed Chair Jerome Powell stated that the Fed is comfortable with the current pace of bond roll-off from its portfolio, suggesting no immediate changes in this strategy [8].