Fed's Logan: "Cautiously Optimistic" About Current Interest Rate Effects, Remains Vigilant on High Inflation Risks

Odaily News Fed's Logan stated on Tuesday that she is "cautiously optimistic" about whether the Fed's current policy interest rate level can drive inflation back down to the 2% target while maintaining stability in the job market. Economic data in the coming months will test the validity of this assessment. Logan said: "If this is the case, it would indicate that our current policy stance is appropriate, and achieving the dual mandate goals would not require further interest rate cuts." However, she added that if inflation falls back while the labor market cools significantly, "another rate cut might become appropriate. But for now, I am more concerned about inflation remaining stubbornly high." She noted that after three rate cuts last year, the downside risks facing the labor market "appear to have significantly eased," but at the same time, this has also introduced additional risks on the inflation front. She pointed out that with short-term borrowing costs already within a policy range widely estimated as "neutral," the current interest rate level has limited constraining effects on the strongly rebounding economy and the inflation that has persisted above the Fed's target for nearly five years. Logan expects progress on inflation this year, with some preliminary signs of improvement already emerging.