By Michael S. Derby

NEW YORK (Reuters) – Federal Reserve governor Adriana Kugler said Thursday the central bank has made considerable progress in achieving its job and inflation goals, though she stopped short of offering firm guidance on the near-term monetary policy outlook.

> “The United States has seen considerable disinflation while experiencing a cooling but still resilient labor market,” Kugler remarked during a speech at the 2024 Annual Meeting of the Latin American and Caribbean Economic Association and the Latin American and Caribbean Chapter of the Econometric Society in Montevideo, Uruguay.

Kugler acknowledged progress in bringing inflation closer to the 2% target but indicated ongoing challenges from housing and other factors could hinder further easing of price pressures. She mentioned that the job market has rebalanced and cooled, providing a mixed picture.

In terms of monetary policy implications, Kugler stated that decisions would depend on forthcoming data, without indicating whether she expected the Fed to cut rates again next month. She emphasized the need to focus on both inflation and the labor market, saying:

> “A continued but slowing trend in disinflation and cooling labor markets means that we need to continue paying attention to both sides of our mandate.”

Kugler noted that if inflation does not decrease further, it might be appropriate to pause rate cuts. Conversely, if the labor market slows suddenly, it could necessitate gradual reductions in the policy rate.

Additionally, Kugler highlighted the importance of central bank independence, especially amid concerns regarding the potential return of Donald Trump as President. She said:

> "It has been widely recognized – and is a finding of economic research – that central bank independence is fundamental to achieving good policy and good economic outcomes."

Kugler asserted that an independent central bank can adopt a long-term perspective on economic developments, which may be more challenging for elected leaders. However, she also stressed the importance of transparency in central banking practices.