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# Fed's Kugler backs holding rates as tariff concerns push up inflation expectations
- URL: https://www.theglobalbanker.com/fed-s-kugler-backs-holding-rates-as-tariff-concerns-push-up-inflation-expectations/
- Published: 2025-04-03T04:00:00.000Z
- Updated: 2026-10-28T10:37:01.000Z
- Description: Federal Reserve Governor Adriana Kugler said on 2 April 2025 that rising inflation expectations and stalled disinflation support keeping the federal funds rate at 4.25–4.50% while upside risks persist.
- Author: TGB Editorial Team
- Tags: Central Banks, Americas, #archive

Federal Reserve Governor Adriana Kugler said on 2 April 2025 that she would support keeping US interest rates unchanged while upside risks to inflation persist, citing a rise in inflation expectations that consumers and businesses have linked to tariffs.

Speaking at Princeton University in a speech titled “Inflation Expectations and Monetary Policymaking”, Kugler said several measures of inflation expectations had increased in recent months, “with both consumers and businesses reporting new and proposed tariffs as an important reason”. She pointed to notable increases in one-year-ahead measures from the University of Michigan, the Conference Board, the Atlanta Fed's business survey, the Philadelphia Fed's Survey of Professional Forecasters and the New York Fed's consumer survey.

#### ANTICIPATORY EXPECTATIONS

Kugler described the recent jump in short-term expectations as largely anticipatory, noting that consumers' perceptions of past inflation had fallen even as their short-run expectations climbed. She said this could give businesses greater ability to pass higher costs on to consumers when those costs stem from external factors. She added that she took some comfort from much smaller increases in longer-term expectations as measured by the Philadelphia Fed's Survey of Professional Forecasters, and from the stability of longer-term measures of inflation compensation, although she noted that the Michigan survey's longer-term expectations had reached their highest since February 1993.

On realised inflation, Kugler said progress towards the Federal Open Market Committee's 2 per cent goal may have stalled, with core PCE inflation at 2.8 per cent in the 12 months to February, the same level as in the last quarter of 2024\. She described the labour market as resilient: 151,000 jobs were added in February, against a six-month average of 177,000, while the unemployment rate rose to 4.1 per cent.

#### POLICY STANCE

Kugler said she had strongly supported the FOMC's March decision to hold the federal funds target range at 4.25 per cent to 4.50 per cent. “I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable,” she said, adding that she would carefully assess incoming data, the evolving outlook and the balance of risks.