Jefferson Want's To Damaging Economy ore Than Required, Touches On Banking Sector Risks

In follow up comments to his initial remarks Fed Governor Jefferson reiterated that inflation remains too high, while noting that the central bank needs to combat the risk of higher inflation expectations. Jefferson also stressed the need to avoid damaging the economy “any more than is necessary.”

• When it came to banking regulation Jefferson noted that he would “like to think” that the U.S. regulatory bodies are aware of moral hazard, which is a risk that must be monitored.
• Jefferson also indicated the desire to destigmatise the use of the Fed’s discount window mechanism, while noting that the recent increased usage of the lending facility is appropriate at present.
• Finally, Jefferson was clearly cognisant of the disproportionate impact on small businesses re: potential consolidation in the small and regional banking sphere.