Fed's Kugler and Daly Assert Work on Inflation Remains Incomplete

By Ann Saphir

(Reuters) - At an annual conference hosted by the American Economic Association in San Francisco, two Federal Reserve officials, Governor Adriana Kugler and San Francisco Federal Reserve President Mary Daly, expressed their views on the current state of inflation and the labor market. They emphasized that while progress has been made in controlling inflation, their work is still ongoing.

The Federal Reserve has made considerable adjustments to short-term interest rates, lowering them by a whole percentage point last year, bringing the current rate range to 4.25% - 4.50%. However, despite this effort, inflation remains a concern, as it currently sits at 2.4%, which is above the Fed's target goal of 2%.

According to Kugler, it is clear that further work is necessary to manage inflation: "We are fully aware that we are not there yet - no one is popping champagne anywhere.", she remarked. She stressed the importance of maintaining the unemployment rate, which as of November stood at 4.2%. This rate aligns with the Fed’s aim for maximum employment.

Daly echoed Kugler’s thoughts by highlighting the need to avoid any significant declines in the labor market. "At this point, I would not want to see further slowing in the labor market -- maybe gradually moving around in bumps and chunks on a given month," she noted.

The officials also did not share their perspectives on potential upcoming economic policies under the incoming administration, including those that might involve tariffs and tax adjustments, which some analysts believe could further drive growth and inflation.

As the economy continues to evolve, Kugler and Daly’s remarks underscore the challenge for the Federal Reserve: balancing the control of inflation while ensuring ongoing labor market stability.

Federal, Reserve, Inflation