Two Federal Reserve officials speak out in unison: support further interest rate cuts
Federal Reserve officials Kuggler and Williams both expressed support for further interest rate cuts. Kuggler emphasized that she would support further rate cuts if inflation continues to slow, mentioning the need to balance the dual mandate of maximizing employment and reducing inflation. Williams believes that after a 50 basis point rate cut in September, further rate cuts are appropriate in the future. Both officials are closely monitoring economic data and external risks affecting policy
According to the Wise Finance APP, Adriana Kugler, a member of the Federal Reserve Board, expressed strong support for the recent rate cuts by the Federal Reserve on Tuesday. She stated that if inflation continues to slow as she expects, she will support further rate cuts.
Kugler said, "While I believe the focus should still be on continuing to bring the inflation rate back to the 2% target, I also support shifting attention to achieving maximum employment in the Federal Open Market Committee's (FOMC) dual mandate." "The labor market remains resilient, but I support taking a balanced approach to the FOMC's dual mandate so that we can continue to make progress on inflation while avoiding unwelcome slowdowns in job growth and economic expansion."
Kugler mentioned that the strength of the U.S. economy has allowed the FOMC to "be patient in timing policy rate cuts" and focus on reducing inflation. She stated, "If progress on inflation continues as I expect, I will support further lowering the federal funds rate to gradually move towards a more neutral policy stance." She added that she is closely monitoring the impact of Hurricane "Helene" on the economy and geopolitical events in the Middle East.
Kugler said, "If the downside risks to employment increase, perhaps a quicker shift to a neutral policy stance should be considered. Alternatively, if future data does not convince people that inflation is continuing to fall back to 2%, slowing the pace of policy rate normalization may be appropriate."
Meanwhile, John Williams, the President of the Federal Reserve Bank of New York, who has permanent voting rights on the FOMC, stated in an interview on Tuesday that following the 50 basis point rate cut in September, it would be appropriate for the Federal Reserve to cut rates again "over time."
In the interview, Williams stated that he does not believe the 50 basis point rate cut in September "is a guide to our future actions." He said, "I personally expect that it would be appropriate to cut rates again over time." "Currently, I think monetary policy is well positioned for the outlook. If you look at the economic forecast summary, you will see that this is a very good baseline scenario, with the economy continuing to grow and inflation returning to 2%."
It is worth noting that the U.S. non-farm payroll data for September, released last Friday, was stronger than market expectations, leading the market to reduce bets on a Fed rate cut. According to the FedWatch tool from the Chicago Mercantile Exchange (CME), traders currently estimate an 87% probability of a 25 basis point rate cut next month, and have ruled out the possibility of a significant 50 basis point rate cut