(Bloomberg) -- Federal Reserve Governor Adriana Kugler expressed optimism about the trajectory of inflation and broader economic conditions, while underscoring the central bank’s policy decisions are not on a preset course.
“I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices,” Kugler said Tuesday in prepared remarks for an event in Detroit. “The labor market remains solid, and inflation appears to be on a sustainable path to our 2% goal, even if there have been some bumps along the way.”
Fed officials lowered the central bank’s benchmark interest rate at each of their last two meetings, including a larger-than-usual, half-percentage-point reduction in September. Kugler noted these “were steps toward removing restraint, as we are in the process of moving policy toward a more neutral setting.”
Several officials in recent weeks have advocated for a cautious approach to further rate cuts. Those calls come amid receding concerns about the labor market, along with choppiness in inflation data. The Fed’s preferred gauge of underlying inflation picked up in October on an annual basis.
Kugler said she still views that data as consistent with inflation being on a path to the Fed’s objective of 2%, but that “the job is not yet done.” She said housing services inflation, in particular, remains elevated.
“I will vigilantly monitor for incoming risks or negative supply shocks that may undo the progress that we have achieved in reducing inflation,” Kugler said. “I view our current policy setting as well positioned to deal with any uncertainties we face in pursuing both sides of our dual mandate.”
Jobs Picture
Labor market data for November due Friday is expected to show the unemployment rate held at 4.1% and hiring bounced back after a weak showing in October, according to a Bloomberg survey of economists.
While the October employment snapshot was muddied by the effects of severe weather and worker strikes, other figures have signaled the jobs landscape remains solid overall. That has helped ease fears that a cooling labor market might be on the cusp of a more pronounced slowdown.
Fed officials will issue their next policy decision following their Dec. 17-18 meeting in Washington.
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