Federal Reserve's Kugler: The real economy is robust, and we can patiently cope with tariff uncertainties
Federal Reserve Governor Adriana Kugler stated that the Federal Reserve should maintain stable interest rates, as the U.S. real economy is robust, while also being cautious of the uncertainties surrounding Trump's tariff policies. She pointed out that the healthy economic fundamentals have given the Federal Reserve more time to ensure inflation recedes and avoid market volatility. Kugler mentioned that tariff policies could lead to a future pullback in consumer spending, but core economic indicators still show resilience. The Federal Reserve will continue to adopt a "wait-and-see" strategy to balance economic growth and price stability
According to the Zhitong Finance APP, Federal Reserve Governor Adriana Kugler stated that the current Federal Reserve should maintain stable interest rates, as the U.S. real economy remains robust and there is a need to be cautious of the uncertainties brought by Trump's tariff policies. In an interview, she pointed out: "The fundamentals of the real economy are healthy, which gives us more time—to ensure inflation continues to decline while avoiding significant fluctuations in market expectations."
This week, the Federal Reserve's monetary policy meeting decided to keep interest rates unchanged and signaled an increase in concerns about "recurring inflation" and "rising unemployment rates." Federal Reserve Chairman Jerome Powell emphasized afterward that the central bank would not hastily adjust its interest rate policy. This stance echoes Kugler's remarks, highlighting the Federal Reserve's cautious attitude in balancing economic growth and price stability.
Kugler specifically mentioned the latest GDP data: influenced by Trump's new tariff policies, U.S. businesses and consumers concentrated their purchases before the tariffs took effect, leading to the first quarterly contraction in economic activity since 2022. She warned: "After the previous surge in purchases, future consumer spending may face downward pressure." However, she also noted that aside from tariff disruptions, core indicators such as the job market and household income still show that the economy has resilience.
Currently, the market is focused on two major variables: first, the implementation pace and actual impact range of the Trump administration's tariff policies; second, whether the Federal Reserve will adjust its policy path due to fluctuations in economic data. Kugler's remarks suggest that, until the tariff risks are fully clarified, the Federal Reserve may continue its "wait-and-see" strategy, avoiding premature rate cuts that could trigger a rebound in inflation while also preventing excessively high rates from exacerbating economic downward pressure
