Adriana Kugler, a member of the U.S. Federal Reserve, stated in an interview with Steven Liesman on CNBC that the U.S. economy concluded 2024 in a strong and reassuring position, highlighting its significant resilience in facing economic challenges.
Kugler explained that the economy continued its disinflationary process while maintaining a stable labor market. The labor market showed gradual slowing without severe deterioration, with unemployment rates remaining historically low, reflecting notable stability.
She emphasized that the moderate cooling of the labor market positively impacted real wages, keeping them high. This supported individuals' purchasing power and the broader economy. She noted that the labor market’s stability and controlled cooling were key to achieving economic balance. Kugler expressed optimism about productivity, considering it a primary driver of economic performance. She described it as a positive supply shock that bolstered growth while aligning with ongoing disinflationary pressures.
Regarding external factors, Kugler pointed to immigration as a contributor to balancing the U.S. labor market in recent periods. However, she expressed uncertainty about future immigration trends and their economic implications. On trade policies, she voiced caution about the economic and political repercussions of tariffs, stating that their impact would depend heavily on their continuation and responsiveness to the evolving economic landscape.
Monetary Policy Outlook
Kugler explained that the Federal Reserve continues to navigate a wide range of economic scenarios to ensure market stability and meet inflation targets. She added that the Fed closely monitors inflation trends to determine whether pressures will persist over the long term, emphasizing that economic data will remain the decisive factor in shaping monetary policy.
She also noted growing sentiment within the Federal Reserve toward adopting a cautious approach to future interest rate cuts. This reflects a measured and prudent stance by policymakers.
Concluding Remarks
Kugler refrained from commenting on potential policies under the next U.S. administration, stressing that the Federal Reserve’s current priority is supporting the stability of the American economy by focusing on core indicators. She reaffirmed the importance of productivity and immigration in maintaining economic balance and expressed optimism about the future of the U.S. economy given these factors.
