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Federal Reserve Governor Adriana Kugler expressed strong support for the recent interest rate cut by the U.S. Central bank and indicated willingness to back further reductions if Inflation continues to ease as expected. The Fed’s decision to lower Interest rates by half a percentage point last month was seen as a response to cooling labor market conditions and decreasing Inflation pressures, with investors anticipating another smaller rate cut in November.

Kugler emphasized the importance of maintaining focus on bringing Inflation to the target of 2%, while also turning attention to maximizing employment levels as part of the Federal Open Market Committee’s dual mandate. She highlighted the need to prevent a significant slowdown in the labor market, noting signs of cooling that the Fed is mindful of.

While acknowledging the recent positive job report showing increased job creation and a decline in the unemployment rate, Kugler stressed the importance of considering broader trends rather than individual indicators. She emphasized the need for a balanced approach to achieve progress on Inflation without sacrificing employment growth and economic expansion.

Kugler expressed readiness to support additional cuts in the federal funds rate if progress on Inflation continues as anticipated. She also mentioned keeping a close watch on the economic impact of Hurricane Helene and geopolitical events in the Middle East. The Governor suggested a quicker move towards a neutral policy stance if downside risks to employment escalate, or a slowdown in normalization if Inflation does not show sustainable progress towards the target.

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