“In light of these risks, I believe it’s much too soon to think about cutting interest rates,” Logan said. “I will need to see more of the uncertainty resolved about which economic path we’re on.”
Fed officials, she added, “should remain prepared to respond appropriately if inflation stops falling.”
Fed Governor Michelle Bowman echoed concerns about potential upside risks to inflation, reiterating that while price pressures are expected to lessen, it’s not yet time to lower interest rates.
Labor market strength vs. inflation focus
Logan’s remarks indicate she’s likely among the policymakers who expect two or fewer rate cuts in 2024. Despite the recent strong jobs report, which showed a payroll surge and a decline in the unemployment rate, Logan emphasized the importance of prioritizing inflation data when assessing economic conditions.
“To be clear, the key risk is not that inflation might rise — though monetary policymakers must always remain on guard against that outcome — but rather that inflation will stall out and fail to follow the forecast path all the way back to 2% in a timely way,” Logan said.
Source: mpamag.com