Fed’s Kugler Supports Additional Rate Cuts If Inflation Continues to Ease, Reports Reuters

Federal Reserve Governor Adriana Kugler expressed strong support for the recent interest rate cut by the U.S. central bank and indicated she would advocate for further reductions if inflation continues to decline as anticipated.

Kugler noted the importance of maintaining focus on bringing inflation down to the 2% target. However, she emphasized the need to also consider the maximum employment aspect of the Federal Open Market Committee’s dual mandate. “The labor market remains resilient, but I support a balanced approach to ensure we can continue progress on inflation while avoiding an undesirable slowdown in employment growth and economic expansion,” she stated.

During her remarks at a conference held by the European Central Bank in Frankfurt, Germany, Kugler discussed the global factors contributing to the post-pandemic inflation and highlighted the varying inflation experiences across different regions.

She affirmed her support for last month’s rate decrease, which aligned with similar actions taken by other central banks. Kugler pointed out that the strength of the U.S. economy allowed the Federal Open Market Committee the luxury of patience regarding policy rate adjustments and emphasized the importance of focusing on inflation reduction.

“If inflation continues to improve as I anticipate, I will support further cuts in the federal funds rate to gradually achieve a more neutral policy stance,” Kugler added.

Furthermore, she mentioned she is closely observing the economic implications of Hurricane Helene as well as geopolitical events in the Middle East. Kugler indicated that if risks to employment increase, a more rapid shift toward a neutral policy stance may be warranted. Conversely, if there are no clear signs of sustainable progress toward the 2% inflation target, it may be necessary to slow down the normalization of the policy rate.