Fed's Kugler: If labor cools too much it will be appropriate to cut

Federal Reserve (Fed) Board of Governors member Dr. Adriana Kugler noted on Tuesday that while inflationary pressures have certainly eased, the Fed still needs some pieces to the rate cut puzzle before movement on rates can occur.

Key highlights

If incoming data does not provide confidence that inflation is moving toward the 2% target, it may be appropriate to hold rates steady a little longer.

If the labor market cools too much, it will be appropriate to cut interest rates sooner rather than later.

Upside risks to inflation, downside risks to employment have become more balanced.

It will be appropriate to begin easing monetary policy later this year if economic conditions continue to evolve favorably.

Continued labor market rebalancing suggests inflation will continue to move toward 2% target.

The labor market has seen substantial rebalancing.

Supply and demand are gradually coming into better balance.

Inflation remains above the US central bank's target.

Inflation has continued to trend down, despite a few bumps at start of this year.

More from Fed's Kugler:

Disinflation is back on track.

On services ex housing, there has been progress with wage moderation, and also progress on housing as well.

I am cautiously optimistic that inflation is returning to 2%.

The Fed does not want the labor market to cool too much.

Inflation expectations especially in the long run have stayed pretty constant and seem anchored.

I am watching data incredibly close given it can weaken fast.