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

Odaily News According to Fed's Logan on Tuesday, she expressed "cautious optimism" regarding 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 judgment. Logan stated: "If this proves to be the case, it would indicate that our current policy stance is appropriate, and no further rate cuts would be needed to achieve the dual mandate objectives." However, she added that if inflation declines while the labor market cools significantly, "another rate cut might become appropriate. But for now, I am more concerned that inflation remains stubbornly high." She mentioned 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 introduced additional risks on the inflation front. She pointed out that with short-term borrowing costs now within a policy range widely estimated as "neutral," the current interest rate level has limited constraining effects on the already strongly rebounding economy and the inflation that has remained above the Fed's target for nearly five years. Logan expects progress on inflation this year, with some preliminary signs of improvement already emerging.