Fed’s Kugler says data will drive Fed policy choices amid uncertainty

Washington: So, Federal Reserve Governor Adriana Kugler recently shared her thoughts on the economy and how the Fed plans to navigate the uncertain waters ahead. She mentioned that the central bank is a bit in the dark about what 2025 will bring, but they’re ready to let the data guide their decisions.

In a CNBC interview, Kugler pointed out that after the Fed’s forecasts last month, there’s a sense that they can take their time with interest rate cuts. She said they want to be gradual and keep an eye on whether inflation starts to ease up.

But if the job market starts to show signs of weakness, she made it clear that the Fed would be prepared to change course. They’re always watching what’s happening in the economy and ready to respond.

Kugler also noted that the economy is in a decent spot right now. Even though the job market has cooled off a bit, it’s still holding strong with low unemployment rates.

When asked about how the incoming Trump administration might impact the economy, she acknowledged the complexity of the situation. There are so many factors at play, making it tough to predict what will happen.

These comments were her first public remarks since the Fed’s last policy meeting, and they come as 2025 is just around the corner. At that mid-December meeting, the Fed lowered interest rates slightly but also adjusted their expectations for future cuts.

With Trump back in the presidency, there’s a lot of uncertainty. His campaign promises included heavy trade tariffs, which many economists believe could spark inflation again. However, the Fed is being cautious, waiting for more details on what policies will actually be put in place.

Kugler mentioned that there are many possible scenarios to consider. Earlier, Richmond Fed President Thomas Barkin echoed her sentiments, saying that uncertainty should decrease once policies are finalized, but it might take a while for everything to settle.

He also pointed out that he sees more risks on the inflation side, but believes the Fed is well-prepared for whatever comes their way. Kugler expressed her preference for maintaining a restrictive policy for a bit longer rather than rushing to lower rates.