Fed's Daly, Kugler Stress Inflation Fight Has Not Yet Been Won

Federal Reserve officials Mary C. Daly and Adriana Kugler have emphasized that the battle against inflation is far from over, despite recent signs of progress. In their recent speeches, they highlighted the need for continued vigilance and appropriate policy adjustments to maintain the Fed's dual mandate of maximum employment and stable prices.



Daly, in her speech on October 14, 2024, acknowledged that inflation has been declining but is still above the Federal Reserve's target. She stated, "Inflation has come down from its peak, but it remains above our 2 percent target." Kugler, in her remarks on December 18, 2024, also acknowledged that inflation has been decreasing but is still higher than desired. She said, "Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated."

Both Daly and Kugler expressed confidence in the stability of inflation expectations. Daly mentioned, "Inflation expectations have remained relatively stable, which is a positive sign." Kugler echoed this sentiment, stating, "I am encouraged that inflation expectations appear to remain well anchored."

However, they also emphasized the uncertainty in the economic outlook and the need for the Federal Reserve to be vigilant in monitoring risks. Daly said, "The economic outlook is uncertain, and we are attentive to the risks to both sides of our dual mandate." Kugler also noted, "The Committee will continue to assess incoming data, the evolving outlook, and the balance of risks."

The Federal Reserve has been addressing the challenges posed by supply chain disruptions and labor market dynamics in controlling inflation by closely monitoring the economic outlook, adjusting its monetary policy stance as appropriate, reducing its holdings of Treasury securities and agency debt, carefully assessing the risks to its dual mandate, and committing to supporting maximum employment and stable prices.

In conclusion, while there have been signs of progress in the fight against inflation, Federal Reserve officials Daly and Kugler have stressed that the battle is not yet won. They have emphasized the need for continued vigilance, appropriate policy adjustments, and a commitment to maintaining the Fed's dual mandate of maximum employment and stable prices. The economic outlook remains uncertain, and the Fed will continue to monitor risks and assess incoming data to determine the appropriate stance of monetary policy.