On Wednesday, usa Federal Reserve Board member Adriana Kugler stated that she strongly supports a 50 basis point rate cut at the September meeting if usa inflation continues to slow as expected, further easing would be appropriate.

Kugler pointed out that the usa Federal Reserve has been making progress in cooling inflation, coupled with the slowdown in the usa labor market, indicating that it is time for the Federal Reserve to loosen monetary policy and closely monitor its employment mandate. Although the current labor market remains resilient, the Federal Reserve needs to strike a balance in order to make progress in reducing inflation while avoiding unnecessary pain and softness in the economy.

Kugler did not specify the speed of the expected rate cuts to come, especially whether she would support lowering the benchmark interest rate by another half percentage point at the usa Federal Reserve's policy meeting on November 6-7, and under what conditions further cuts would be made. Kugler and most of her colleagues voted last week to cut rates by 50 basis points, a magnitude that exceeded the expectations of many economists.

Kugler stated that she expects the latest PCE inflation data to be released this Friday to show continued easing of price pressures, with the overall Personal Consumption Expenditure Price Index in August rising by only 2.2% year-on-year.

Kugler previously served as usa Department of Labor Chief Economist. She believes the labor market has slowed significantly, with hiring slowing and fewer resignations. Recent revisions to employment data have made it necessary for policymakers to assess a range of labor market indicators. Nevertheless, Kugler stated that the unemployment rate remains at historical lows. In conclusion, after a period of supply shortage, the usa labor market seems to have regained balance.

Editor/Lambor