Fed Governor Adriana Kugler
Question and answer with Kugler has begun. She says:
- This inflation was rapid in the second half of 2023
- Inflation on 3-6 month basis as moved to 2% level
- Wage growth moderation is key
- Services ex-housing is one of the elements to be watched for continued declines
- Housing inflation has been persistent but is expected to come down
- Layoffs in US are spotty and not showing up in aggregate data
- Immigration is helped in some sectors including construction
- We need further moderation in wage data especially the service sector, but it is moderating and this filtering through to prices
- Wage moderation needs to continue, though level that is consistent with inflation target depends on factors like productivity
- Too early to assess AI's potential on productivity
- Progress on inflation has been aided by both Fed policy impact on demand and healing of the supply-side.
- There is still room for healing on the supply-side help lower inflation.
- 20% of companies are still seeing shortage of goods supplies
- There is much uncertainty around the neutral rate of interest.
- At the policy interest rate will depend on performance of inflation
- Aware that unemployment rate can move fast when it starts to change
- Watching commercial real estate for source of financial stress.
- Keeping a close eye on regional bank exposure
- May be some upward pressure coming on goods prices given global shipping, other risk
- Every meeting is 'live' from here and moving forward.
