Fed Governor Adriana Kugler says "if disinflation and labor market conditions proceed as I am currently expecting, then some lowering of the policy rate this year would be appropriate"
- "But there are also downside risks to economic activity. Measures of consumer credit delinquencies have been on the rise, which might point to a more significant slowing of consumer spending than expected. And labor markets can sometimes deteriorate very quickly, without much warning in closely watched spending data. The February employment report featured a rise in the unemployment rate, half of which was accounted for by layoffs. I study a range of layoff indicators, both in the official data and in measures based on information contained in publicly traded firms' earnings reports or Google searches, and I will continue to watch a whole range of indicators closely.
- Finally, let me briefly discuss monetary policy. As I have noted, policy is currently restrictive, and my baseline expectation is that disinflation will continue without a broad economic slowdown—though such an outcome is not assured.
- In considering the appropriate path of monetary policy, I am guided by the FOMC's dual mandate of maximum employment and price stability. After the March FOMC meeting, the Committee said that it "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."10 After that meeting, we also published the Summary of Economic Projections, which summarizes the forecasts of FOMC participants. Most FOMC participants expect that it will be appropriate to begin lowering the federal funds rate sometime this year. My own expectation is consistent with that; if disinflation and la