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FED: Gov Kugler "Strongly Supported" 50bp Cut, Expects Additional Cuts

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Gov Kugler is broadly considered to be a dovish-leaning Committee member. And as a labor market economist it's probably little surprise that her speech today notes (link) that she "strongly supported" the FOMC's decision to cut by 50bp this month on the basis of "cooling in the labor market" and "significant ongoing progress in reducing inflation". There was little notable market reaction to her speech though there is a Q&A pending.

  • She characterizes the labor market as "still resilient", having "rebalanced" after "a significant moderation ... recently". She notes that the 4.2% unemployment rate in August was "still quite low by historical standards", but the slowdown in demand "is most evident in payroll numbers". Even so, "given recent revisions in the payroll numbers, it is important to continue monitoring additional labor market indicators" including diffusion indices, quits, and vacancies-to-unemployment.
  • On growth, she expects personal spending ("which accounts for the majority of economic activity") to "grow at a somewhat more moderate pace moving forward", in part because of a cooling labor market.
  • Looking forward, she unsurprisingly envisages further cuts, though doesn't mention their potential size: “The labor market remains resilient, but the FOMC now needs to balance its focus so we can continue making progress on disinflation while avoiding unnecessary pain and weakness in the economy as disinflation continues in the right trajectory. I strongly supported last week's decision and, if progress on inflation continues as I expect, I will support additional cuts in the federal funds rate going forward."
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Gov Kugler is broadly considered to be a dovish-leaning Committee member. And as a labor market economist it's probably little surprise that her speech today notes (link) that she "strongly supported" the FOMC's decision to cut by 50bp this month on the basis of "cooling in the labor market" and "significant ongoing progress in reducing inflation". There was little notable market reaction to her speech though there is a Q&A pending.

  • She characterizes the labor market as "still resilient", having "rebalanced" after "a significant moderation ... recently". She notes that the 4.2% unemployment rate in August was "still quite low by historical standards", but the slowdown in demand "is most evident in payroll numbers". Even so, "given recent revisions in the payroll numbers, it is important to continue monitoring additional labor market indicators" including diffusion indices, quits, and vacancies-to-unemployment.
  • On growth, she expects personal spending ("which accounts for the majority of economic activity") to "grow at a somewhat more moderate pace moving forward", in part because of a cooling labor market.
  • Looking forward, she unsurprisingly envisages further cuts, though doesn't mention their potential size: “The labor market remains resilient, but the FOMC now needs to balance its focus so we can continue making progress on disinflation while avoiding unnecessary pain and weakness in the economy as disinflation continues in the right trajectory. I strongly supported last week's decision and, if progress on inflation continues as I expect, I will support additional cuts in the federal funds rate going forward."