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Federal Reserve (Fed) Board of Governors member Adriana Kugler delivered a speech at the Peterson Institute for International Economics on Tuesday, noting that while inflation remains too high, recent inflation data has been encouraging. Fed Governor Kugler also made a point of cautioning that progress to inflation targets may be gradual. Key highlights Monetary policy is sufficiently restrictive, economic conditions are moving in the right direction. It is likely appropriate to begin easing policy sometimes later this year if economy evolves as expected. I am optimistic on productivity growth, with surge in new businesses, and AI likely to diffuse quickly. Preponderance of labor market data show supply, demand coming into better balance. Most indicators point to a slow, steady easing in labor market. If wage growth continues to moderate, will soon be at levels consistent with price stability. I am optimistic that improving supply, and cooling demand will support continued disinflation. Further progress on inflation likely to be gradual. Policy has more work to do, judgment will be guided by data. I am watching closely for any signs of labor market deterioration. Inflation is too high, but I am encouraged by the renewed recent progress & trajectory. I expect some cooling of economic activity to continue. Additional Kugler comments We have seen an increase in delinquencies indicating that households are being stretched. Retail sales indicate that economic activity may be cooling. How much we cut will be a question we continue to assess as more data comes in. When asked why not cut at next meeting: There are risks on both sides of the mandate. We certainly need to be convinced that we are not going to put in danger all the great progress made on inflation.  In contrast to rest of the world, there has been quite a bit…

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Filed under: News - @ June 18, 2024 10:18 pm