Two policymakers from the Federal Reserve stated last Saturday that they believe the task of controlling inflation is not yet complete, but also hinted that they do not want to take risks that could harm the labor market while trying to accomplish this work.
According to the Zhitong Finance APP, two policymakers from the Federal Reserve stated last Saturday that they believe the task of controlling inflation is not yet complete, but they also suggested that they do not want to take risks that could harm the labor market while trying to accomplish this task.
The remarks by Federal Reserve Governor Kulgler and San Francisco Fed President Daly highlight the delicate balance that Federal Reserve officials face this year as they seek to slow the pace of interest rate cuts. The Federal Reserve lowered short-term interest rates by a full 100 basis points last year, currently standing at 4.25%-4.50%.
The Federal Reserve's preferred inflation indicators are far below the peak of around 7% in mid-2022, reaching 2.4% last November. Nevertheless, this still exceeds the Federal Reserve's target of 2%, and in December, policymakers expect that progress toward achieving this goal will be slower than they previously anticipated.
Kulgler stated at the annual meeting of the American Economic Association held in San Francisco, "We are fully aware that we have not achieved this — no one is celebrating anywhere. At the same time... we want the unemployment rate to remain unchanged," rather than rising rapidly.
Last November, the unemployment rate reached 4.2%, which aligns with her and her colleague Daly's view that maximizing employment is the second goal of the Federal Reserve after price stability.
"At this point, I do not want to see the labor market slowing further — there may be gradual fluctuations in some months, but certainly no further slowdown in the employment market," Daly stated at the same panel discussion.
Regarding the policies of the incoming USA President Trump, these two Federal Reserve policymakers were neither asked nor voluntarily expressed their views on the potential economic impact, including tariffs and tax cuts, with some speculating that these policies might stimulate growth and reignite inflation.