Fed's Jefferson says inflation, not markets, will set his policy course

Federal Reserve Vice Chair Philip Jefferson said he is taking his policy cues from inflation rather than from financial markets, putting price data at the centre of the US central bank's next move on interest rates.

Jefferson's remarks matter for anyone holding dollar assets, from Pakistani exporters and remittance senders to investors in US stocks and bonds: the path of Fed rates sets the dollar's strength and the cost of borrowing worldwide.

The comments came as investors weighed whether money is rotating out of the AI trade, with Seoul halting trading and Indian equities posting their best week since 2021.

Jefferson did not signal a specific timing for any rate decision, leaving the next move tied to upcoming inflation readings.

What it means for Pakistan: For Pakistan, a Fed that watches inflation before cutting rates keeps the dollar firm and global borrowing costs elevated, a factor for the rupee, for importers and for the government's external financing costs. Remittance flows from Pakistanis working in the US and Gulf are also sensitive to dollar strength.