Federal Reserve Governor Adriana Kugler expressed that while the current Federal Reserve interest rate policy is positioned as restrictive, progress in achieving the 2% inflation target has slowed since last summer. Kugler highlighted concerns regarding the recent increase in goods inflation, considering it unhelpful. She noted a rise in inflation expectations among American consumers, as seen in surveys, as a significant issue for scrutiny.

The latest reports on the Consumer Price Index and Producer Price Index suggest that the Personal Consumption Expenditures price index, used by the Fed, increased at a 2.5% rate year-over-year in February, consistent with January's figure. Kugler pointed out a reacceleration of inflation in certain categories in recent months, particularly in goods inflation, which had previously been negative but has turned positive now. She emphasized that this shift could impact overall inflation as well as inflation expectations negatively.

Kugler expressed concern about the surge in inflation expectations related to the Trump administration's proposed tariffs on imported goods, as indicated by surveys like the University of Michigan's Consumer Sentiment Index. She emphasized the need for vigilance regarding the rise in price levels and inflation expectations, especially in light of recent inflation trends.

Although economic indicators like retail sales have shown a slowdown in activity at the start of the year, Kugler observed stability in the labor market through February. Her term on the Federal Reserve Board of Governors expires next year, indicating a keen awareness of current economic conditions and inflationary pressures.