04:05 PM EDT, 06/05/2025 (MT Newswires) -- Tariffs will likely drive prices higher through 2025 and could lead to job losses, Federal Reserve Governor Adriana Kugler said Thursday as she voiced support for keeping interest rates steady.

President Donald Trump has repeatedly called on Fed Chair Jerome Powell to cut interest rates, most recently after Automatic Data Processing (ADP) released its employment numbers on Wednesday. That report showed private sector employment grew last month at the slowest pace since March 2023.

Despite continuing progress toward the Federal Open Market Committee's 2% inflation target, the Fed governor said goods inflation has escalated.

"Disinflation has slowed, and we are already seeing the effects of higher tariffs, which I expect will continue to raise inflation over 2025," Kugler said in a speech at the Economic Club of New York. "I see greater upside risks to inflation at this juncture and potential downside risks to employment and output growth down the road, and this leads me to continue to support maintaining the FOMC's policy rate at its current setting if upside risks to inflation remain."

The FOMC next meets on June 17 and 18, when its widely expected to hold its policy steady.

After agreeing last month to suspend most tariffs on each other's imports for 90 days, the US and China recently accused each other of violating their preliminary trade deal. In a social media post on Thursday, Trump said that he had a "very good" phone call with his Chinese counterpart, Xi Jinping.

In April, Trump declared a 90-day pause on certain tariffs for countries that didn't retaliate to his reciprocal duties.

"I view our current stance of monetary policy as well-positioned for any changes in the macroeconomic environment," Kugler said, echoing remarks made by Fed Governor Lisa Cook on Tuesday.

In its latest Beige Book released Wednesday, the Fed said that US economic activity "declined slightly" since late April as tariffs put upward pressure on prices.

"The nontraditional data on economic activity are consistent with my overall assessment that we might be seeing some moderation in the growth of economic activity but not yet a significant slowdown," Kugler said Thursday.