Fed’s Kugler says she supports more rate cuts if inflation keeps easing
2024.10.08 03:52
(Reuters) – Federal Reserve Governor Adriana Kugler said on Tuesday she strongly supported the U.S. central bank’s recent interest rate cut and will support further reductions if inflation continues to ease as she expects.
“While I believe the focus should remain on continuing to bring inflation to 2%, I support shifting attention to the maximum-employment side of the FOMC’s dual mandate as well,” Kugler said, referring to the U.S. rate-setting Federal Open Market Committee, of which she is a member.
“The labor market remains resilient, but I support a balanced approach to the FOMC’s dual mandate so we can continue making progress on inflation while avoiding an undesirable slowdown in employment growth and economic expansion.”
Kugler’s prepared remarks at a European Central Bank conference in Frankfurt, Germany were mostly about the shared global reasons for the worldwide bout of inflation that followed the pandemic, and the range of experiences across regions as inflation began to recede.
The Fed lowered rates last month, a move Kugler said she strongly supported, following similar decisions by other central banks including the ECB.
A stronger U.S. economy allowed the FOMC to be “patient about the timing” in reducing its policy rate and focus on bringing inflation down, Kugler said.
“If progress on inflation continues as I expect, I will support additional cuts in the federal funds rate to move toward a more neutral policy stance over time,” Kugler said.
Kugler said she is closely monitoring the economic effects of Hurricane Helene and geopolitical events in the Middle East.
“If downside risks to employment escalate, it may be appropriate to move policy more quickly to a neutral stance,” Kugler said. “Alternatively, if incoming data do not provide confidence that inflation is moving sustainably toward 2%, it may be appropriate to slow normalization in the policy rate.”
