Kugler says that Fed must keep interest rates amid the inflation risks

Inflation could be sticky, while prices could resume again, warned the governor of the Adriana Kugler Federal Reserve, indicating that the central bank of the United States must maintain stable interest rates for the time.

“Actually, I am quite worried on the part of the persistence in the inflation we have been seeing,” CNBC told Silvia Amaro during a talk by the fire at the conference on monetary policy transmission and the labor market on Friday.

He pointed out a recent acceleration of inflation expectations, which said that closely observes its effect on how companies establish prices and how workers negotiate salaries. This in turn means that they could return to inflation.

Several recent data points have indicated consumer concerns about increasing prices, with the last Consumer Trust Index of the Conference Board demonstration Inflation expectations of 12 months increased to 6% in February, compared to 5.2% of the previous month.

“I have been one of those who firmly supported any policy that really maintains well -anchored inflation expectations. And I think that is critical, and it has served us well,” Kugler said.

Looking towards the future, the Fed Kugler indicated that prices could also increase again.

“I think you know that there are reasons to believe, potentially, that there could be price increases and more persistent inflation,” he said, adding that the highest prices could come from “some of the policies that perhaps are being considered and some that have already been put in place.”

Such policies could also affect economic activity, Kugler said.

“We must probably take into account something of this persistence that I mentioned, due to different pricing categories, due to inflation expectations, and potentially because some of the new policies that are ahead of us,” Kugler said.

Touching the frequently changing developments surrounding the decision of the US administration.

Analysts and economists have widely indicated that they expect potential tariffs, and any reciprocal measure to increase prices for countries on both sides of the measures.

In prepared Observations Kugler gave at the conference, he also warned about the risks of inflation that also intervened in the perspectives of Fed’s interest rates.

“Given the recent increase in inflation expectations and the key inflation categories that have not shown progress towards our 2 percent objective, it could be appropriate to continue maintaining the policy rate at its current level for some time,” he said in the direction.

The Fed has reduced interest rates three times since September, for a completely combined percentage point, before staying stable in January. The bank’s night indebtedness rate is currently in a range between 4.25%-4.5%.

According CME Group Fedwatch ToolThe merchants were the last prices in a 97% chance that the Central Bank also left rates without changes when it meets at the end of this month. Then, the image seems to be less clear, with a probability of around 63% of the rates that also remain at the May Meeting of the Fed, before leaning towards a rate cut in June.