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Fed's Kugler says labor market healthy, inflation elevated
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Fed's Kugler says labor market healthy, inflation elevated
Feb 7, 2025 9:19 AM

(Reuters) - In remarks that suggest she is in no hurry to cut interest rates, Federal Reserve Governor Adriana Kugler on Friday said she expects continued solid economic growth this quarter, and noted slow progress on inflation and a lack of clarity on how the Trump administration's policies will affect the economy.

A Labor Department report showing the unemployment rate edged down to 4% last month and employers adding 143,000 jobs is "consistent with a healthy labor market that is neither weakening nor showing signs of overheating," Kugler said in remarks prepared for delivery in Miami, Florida.

And though inflation has fallen significantly from its mid-2022 peak, she said, "recent progress on inflation has been slow and uneven, and inflation remains elevated," and there is "considerable uncertainty" about the economic impact of new policy proposals.

Kugler did not say specifically how all that would shape her view of how long the Fed should hold its policy rate steady after last week's decision to leave short-term U.S. borrowing costs in the 4.25%-4.50% range.

"Going forward, in considering the appropriate federal funds rate, we will watch these developments closely and continue to carefully assess incoming data, the evolving outlook, and the balance of risks," she said.

The language is similar to that included in the Fed's own statement last week. Fed Chair Jerome Powell said then that the rate-setting committee is in no hurry to cut interest rates, but would wait to see more progress on inflation or a weakening of the labor market.

Most of Kugler's remarks focused on recent gains in productivity growth that, if they continue, will make it easier for the Fed to attain its two goals of 2% inflation and full employment, she said. She spoke in Miami, a day after giving a Spanish-language interview to Univision, and at both events highlighted the importance of Latinos and Latino immigrants to the U.S. economy.

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