Fed Governor Adriana Kugler said in a speech that she supports holding interest rates steady as long as upside inflation risks persist, provided that economic activity and employment remain stable.
Kugler noted that the current policy stance is “well positioned” to adapt to evolving macroeconomic conditions, but emphasized the need for caution given the increasing complexity of the outlook.
She highlighted a significant rise in uncertainty, pointing to a dual threat: upward pressure on inflation and downside risks to employment.
The recent escalation in tariffs, described as “significantly larger” than previously expected, has heightened concerns about both growth and price stability.
Kugler warned that “the economic effects of tariffs and the associated uncertainty are also likely to be larger than anticipated.”
