Federal Reserve Board of Governors member, Adriana Kugler, recently made headlines with her warning remarks on Friday about the potential adverse effects of unpredictable trade policies. She emphasized how these could severely impact the economy, even leading to inflation rates remaining high over time.
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One of Kugler’s main concerns is the possibility of inflation being more enduring due to policy decisions. She mentioned, "I’m particularly attentive to how inflation expectations are evolving."
When it comes to employment, Kugler doesn’t foresee an abrupt reduction in government jobs, but she is vigilant, keeping a close eye on any unexpected shifts in the job market. "Wage moderation has been instrumental in easing inflation pressures," she noted, adding that a slight increase in the unemployment rate isn’t currently a major concern for her.
The February jobs report was quite robust, according to Kugler. However, she pointed out that there is considerable uncertainty surrounding tariffs, which complicates matters for every sector of the economy. "Given these conditions," she said, "it isn’t unfounded to speculate that we might witness more persistent inflation."
Overall, she stressed that uncertainty poses challenges across the economic landscape, reinforcing the need for cautious and considered economic policymaking.
