Dallas Federal Reserve President Lorie Logan recently emphasized the need for caution in future interest rate decisions due to uncertainties in current monetary policy restrictions. Although she has been supportive of rate cuts, Logan expressed that the number and timing of these cuts remain uncertain. Her remarks were made during an energy conference co-hosted by the Kansas City and Dallas Federal Reserves.
While Logan does not have a vote in monetary policy this year, she acknowledged the Federal Reserve's progress toward its dual goals of maximum employment and price stability. However, she identified three significant risks that could derail these objectives. Logan advocates for a gradual approach by the Federal Open Market Committee (FOMC), suggesting that more rate cuts might be necessary to achieve their targets.
Earlier this month, Federal Reserve officials opted for a second consecutive 25 basis point cut in the federal funds rate target, adjusting it to a range of 4.50% to 4.75%. This decision followed a 50 basis point cut in September, with indications of further 25 basis point cuts planned for upcoming meetings in November and December.
Recent data revealed a consistent 0.3% month-over-month increase in the core Consumer Price Index (CPI, Financial) for the third consecutive month, with a 3.3% year-over-year rise. The overall CPI saw a 2.6% year-over-year increase, marking an acceleration not seen since March. Logan pointed out that while inflation has broadly declined, it has not yet returned to the Fed's 2% target. Potential supply shocks or rising demand could sustain higher inflation levels.
