03:39 PM EST, 11/14/2024 (MT Newswires) -- Disinflation in the US has slowed, while "stubborn" inflation in housing and price pressures in other categories could stall progress toward price stability, Federal Reserve Governor Adriana Kugler said Thursday.

Last week, the central bank's Federal Open Market Committee reduced its benchmark lending rate by 25 basis points, following a 50-basis-point cut in September. Although inflation has made progress toward policymakers' 2% target, it remains "somewhat elevated," the committee said at the time.

"The (US) has seen considerable disinflation while experiencing a cooling but still resilient labor market," Kugler said Thursday in remarks prepared for a speech in Uruguay. "While wage moderation and anchored inflation expectations may allow us to continue making progress on inflation, stubborn housing inflation and high inflation in certain goods and services categories may stall progress in reaching our target."

On Wednesday, data from the Bureau of Labor Statistics showed US consumer inflation rose in line with Wall Street's projections in October. Core inflation, which excludes the volatile food and energy components, was unchanged at 0.3% sequentially. At the annual level, core inflation came in at 3.3%. BLS data showed Thursday that US producer price growth accelerated last month.

"Inflation continues to run hot with little improvement in core consumer prices since June and an acceleration in producer prices in October," Stifel said in a Thursday note to clients. "Coupled with resilient and, in some cases, robust consumer spending resulting in a solid pace of domestic activity, stubbornly sticky price pressures underscore the need for a slow and tempered pace of policy adjustment going forward."

The probability of the FOMC lowering interest rates by 25 basis points next month dropped to 72% Thursday from 83% Wednesday, according to the CME FedWatch tool. The probability of rates remaining unchanged rose to 28%.

Policymakers need to continue to pay attention to both sides of their mandate amid cooling labor markets and a "continued but slowing" trend in disinflation, Kugler said Thursday. "If any risks arise that stall progress or reaccelerate inflation, it would be appropriate to pause our policy rate cuts," she said. "If the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate."

On Wednesday, Dallas Fed President Lorie Logan and St. Louis Fed President Alberto Musalem said the FOMC needs to proceed carefully with rate cuts amid upside risks to inflation. Separately, Kansas City Fed President Jeff Schmid said that while the FOMC needs to ease policy, "it remains to be seen how much further interest rates will decline or where they might eventually settle."