The Fed's Jefferson is out with a speech late in the day but he isn't giving much away:Some upside risks remain, but expect inflation to return to path back to 2%Inflation somewhat elevated, rise in core good prices inconsistent with return to 2% inflationCautiously optimistic for 2026, though face risks to both employment, price stability goalsPleased to see increased use of standing repo operations when economically sensibleExpect 2% economic growth in near term, unemployment rate to hold steady this yearFed rate cuts since 2024 have brought policy rate into range consistent with neutralCurrent policy stance leaves us well positioned to determine how much and when to adjust policy rateAs layoffs remain low, hiring remains lowDo not want to prejudge January rate-setting decisionIt sounds like he's inclined to cut rates later in the year. It would hardly make waves if he argued for holding on Jan 28 as that outcome is 95% priced into markets. In November, he said they should proceed slowly and then earlier this month he characterized the policy rate in a "range consistent with neutral", something he repeated today.Quotables:I am starting 2026 with a cautiously optimistic point of view. Conditions in the labor market appear to be stabilizing, and I see the economy as well positioned to continue to grow while inflation returns to a pathway toward our 2 percent objectiveMore:What is inconsistent with a return to 2 percent inflation is the rise in core good prices....y view that inflation will resume a path toward our goal is consistent with near-term measures of inflation expectations declining from their peaks last year, as reflected in both market- and survey-based measures. And most measures of longer-term expectations remain consistent with our 2 percent inflation goal. This article was written by Adam Button at investinglive.com.