The news: Federal Reserve officials warned the fight against inflation is still with us, while also stressing their need to protect job market stability.
The context: Ahead of the first full trading week of 2025, Federal Reserve Bank of San Francisco President Mary Daly and Federal Reserve Board Governor Adriana Kugler, a voting member of this year’s FOMC, stressed the US central bank has not yet achieved its 2% inflation target, despite progress in reducing inflation from the mid-2022 peak of 7% to 2.4% in November.
Speaking at the American Economic Association conference in San Francisco over the weekend, both highlighted a need to balance inflation control with maintaining a strong labour market.
Kugler emphasised vigilance over inflation data, calling a recent increase a possible “bump.”
The numbers: Daly noted that unemployment, at 4.2% in November, remains historically low but warned against further labour market softening. Her comments come ahead of the monthly jobs report for December, due Friday, which is expected to show 153,000 jobs were added that month with a steady unemployment rate.
The Fed has reduced rates by one percentage point since September and signalled slower rate cuts in 2025.
What they said: “[Inflation] remains I think uncomfortably above our target. But we are working on that,” Daly said at the conference.
“Our job is not done. We are not at 2% yet, so we are definitely aiming still to get there, and we know the job is not done,” Kugler said.
