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Market News Update 🗞
Federal Reserve Governor Adriana Kugler warned Thursday that inflation risks are rising, even as economic growth shows signs of cooling. While she views current policy as "moderately restrictive," she noted potential downside risks to employment and output, citing a rise in layoff intentions and softer revenue and spending data in April. Kugler noted that trade policy changes, including new tariffs, could raise unemployment and inflation in the coming months.
Despite resilient labor markets and stable long-term inflation expectations, Kugler emphasized that inflation, especially in basic services, remains the Federal Reserve's primary concern. She added that the recent surge in imports is likely to reverse, potentially triggering a new round of price increases. With non-traditional indicators suggesting early signs of moderation, Kugler reinforced that the Federal Reserve has not yet seen the full inflationary impact of tariffs, and it is too early to consider broader policy changes until their effects are fully felt.
