(Finance) – “The United States has seen significant disinflation while experiencing a cooling but still resilient job market. Numbers just released this week show that headline and core PCE inflation fell substantially from 7.1 percent to an estimate of 2.3 percent and from 5.6 percent to an estimate of 2.8 percent, respectively. While wage moderation and anchored inflation expectations could allow us to continue making progress on inflation, stubborn housing inflation and high inflation in some categories of goods and services could block progress in achieving our goal.” he stated Adriana Kuglerwho serves on the Board of Governors of the Federal Reserve, at an event in Montevideo, Uruguay.
“At the same time, labor markets have rebalancedgiven a greater supply of labor from immigration and older workers and a lower demand from a restrictive monetary policy – he added – Therefore, although the labor market has experienced a long period of low unemployment and creation of jobs in recent years and strong real wage growth, the labor market has cooled.”
“This combination of a continuing but slowing trend in disinflation and cooling labor markets means that we must continue to pay attention to both sides of our mandate – said Kugler – If risks arise that block progress or reaccelerate inflation, it would be appropriate to suspend our cuts to reference rates. But if the labor market suddenly slows down, it would be appropriate to continue gradually reducing the reference rate.”
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