WASHINGTON – On Wednesday, Federal Reserve Governor Adriana Kugler said that she “strongly supported” the U.S. central bank’s decision to cut interest rates by half a percentage point as part of an emerging focus on the job market.
“The labor market remains resilient, but the (Federal Open Market Committee) now needs to balance its focus so we can continue making progress on disinflation while avoiding unnecessary pain and weakness in the economy,” Kugler said in remarks prepared for delivery at a Harvard Kennedy School event. “I strongly supported last week’s decision and, if progress on inflation continues as I expect, I will support additional cuts.”
Kugler did not detail her expected pace of rate cuts, and in particular, whether she might favor another half-percentage-point reduction in borrowing costs at the Fed’s November 6-7 policy meeting and under what conditions.
But she said she expected new inflation data on Friday to show price pressures continuing to ease, with the headline personal consumption expenditures price index rising perhaps as little as 2.2% on a year-over-year basis in August.
The Fed uses the PCE data to set its 2% inflation target.
A former chief economist at the U.S. Labor Department, Kugler said it was appropriate for the Fed to now focus on a job market that has cooled but “remains resilient” with a 4.2% unemployment rate that is “still quite low by historical standards.”
(Source: ReutersReuters)
