Federal Reserve Governor Adriana Kugler said Thursday that inflation remains a concern as it continues to move toward the central bank’s 2% target. She warned that the path to lower inflation remains uncertain and could face obstacles.
Kugler emphasized that inflation still has “some way to go” before stabilizing at the Fed’s desired level. She noted that economic conditions remain unpredictable, making it difficult to determine the exact timing of rate adjustments.
She supported the Fed’s decision last month to keep short-term interest rates at 4.25%-4.50%. Kugler believes this range exerts moderate restraint on the economy while allowing inflation to gradually decline.
The Fed has maintained a cautious stance, closely monitoring inflation trends before making any policy changes. Officials remain concerned about persistent price pressures in key sectors such as housing and services.
Kugler acknowledged that while inflation has eased from its peak, risks remain due to global supply chain disruptions and geopolitical uncertainties. She stressed that policymakers must remain flexible in response to new economic data.
Financial markets are watching the Fed’s next moves, with investors speculating on when rate cuts could begin. Some economists predict reductions later this year, but Fed officials have signaled they need more evidence of sustained inflation control.
Kugler also highlighted the importance of economic policy stability in supporting price control efforts. Uncertainty surrounding fiscal policies and international trade could complicate the Fed’s ability to manage inflation effectively.
Labor market strength has provided resilience to the economy, but wage growth remains a factor in inflationary pressures. The Fed continues to assess whether employment trends will impact future policy decisions.
Consumer spending has shown signs of slowing, but inflation in core categories remains stubborn. Fed officials are balancing the risks of tightening monetary policy too much or not enough.
Kugler reiterated that the central bank’s decisions will be guided by data rather than a fixed timeline. Policymakers are prepared to adjust interest rates as needed based on changing economic conditions.
Despite challenges, the Fed remains committed to achieving its 2% inflation goal without triggering a severe economic downturn. Kugler assured that officials are carefully weighing all risks before making further moves.
As inflation risks persist, the Fed’s cautious approach signals that rate cuts may not come as quickly as some investors hope. Economic policy uncertainty will continue to shape the central bank’s strategy in the months ahead.
