Fed's Kugler Says It May be 'Appropriate' to Start Monetary Easing Later This year

Federal Reserve Governor Adriana D. Kugler said she anticipates "it will be appropriate to begin easing monetary policy later this year" if economic conditions continue to evolve in a favorable manner with more rapid disinflation, and employment softens while remaining resilient.

"If the labor market cools too much and unemployment continues to increase and is driven by layoffs, I would see it as appropriate to cut rates sooner rather than later," Kugler said as she addressed the National Association for Business Economics Foundation in Washington Tuesday. "Alternatively, if incoming data do not provide confidence that inflation is moving sustainably toward 2 percent, it may be appropriate to hold rates steady for a little longer."

She reiterated that she remains data dependent and continues to rely on multiple and diverse sources of data to form her view of how the economy is evolving, "especially as upside risks to inflation and downside risks to employment have become much more balanced."

Kugler also said inflation continued to trend down in all price categories after a few bumps earlier in the year. She noted that the supply-side bottlenecks eased and demand moderated as households' excess savings were depleted amid high interest rates.

"This continued rebalancing suggests that inflation will continue to move down toward our 2 percent target," she said.