According to Federal Reserve Governor Adriana Kugler, progress toward the U.S. central bank's 2% inflation target has recently slowed down and might have halted altogether. Kugler suggested that due to the lack of inflation progress, as well as the increase in inflation expectations and potential risks associated with policy changes like import tariffs, it would be wise to maintain current interest rates.

She expressed support for keeping the Fed's benchmark rate within the 4.25%-4.50% range to counter the risks to inflation posed by recent policy changes and emphasized the importance of sustained economic growth and stable employment. Kugler acknowledged some moderation in the job market but highlighted that it does not show significant signs of weakness.

In her discussion, Kugler emphasized the influence of inflation expectations on pricing decisions by companies and wage demands by households. She noted that because inflation had been high previously, expectations could be particularly responsive to future price movements.

While Kugler acknowledged the recent uptick in inflation expectations, she also noted some relief in the minimal increases in longer-term expectations according to certain surveys and market indicators. The Federal Reserve decided to maintain interest rates during its March meeting and remains cautious about the potential impact of President Trump's policies. Fed officials have revised their projections for the year, anticipating higher inflation and slower growth following the announcement of Trump's tariff plans.