Fed Logan: "All Options Must Remain Open... Rate Cuts Are Premature"

A Federal Reserve (Fed) official stated that it is still too early to discuss interest rate cuts due to concerns over a rebound in inflation.

On the 30th (local time), Lorie Logan, President of the Dallas Federal Reserve Bank, said at an event held in El Paso, Texas, that "(monetary) policy may not be as restrictive as expected." She pointed out that it is too early to discuss rate cuts, emphasizing that "it is really important to keep all options on the table and maintain flexibility."

Ahead of the release of the Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, President Logan also highlighted concerns about a rebound in inflation. She said, "There is still enough reason to believe we are on the path toward the 2% price stability target," but added, "there is a lot of uncertainty." Accordingly, she explained that it is necessary to review upcoming data and observe changes in the financial markets. Previously, President Logan had warned that early easing in financial markets could rekindle demand.

On the same day, President Logan also fueled related debates by stating that the neutral interest rate may have risen. She said, "There are several reasonable reasons to believe that (the neutral rate) is higher than before the pandemic," mentioning that energy transition, nearshoring, and increased investment demand in artificial intelligence (AI) could potentially raise the neutral rate further.

Meanwhile, on the same day, John Williams, President of the New York Federal Reserve Bank, stated that monetary policy is "still restrictive." President Williams said, "Inflation remains high. There is a lack of further progress," but added, "I am confident that it will ease again in the second half of the year over time." He also emphasized, "Analyzing the data, interest rates in the U.S. will eventually have to come down." He dismissed the possibility of further rate hikes.

Raphael Bostic, President of the Atlanta Federal Reserve Bank, appeared on Fox Business and said that the Fed is unlikely to cut rates at the Federal Open Market Committee (FOMC) meeting in July. Holding a voting right at this year's FOMC, he predicted that inflation will ease "very slowly" throughout the year, and depending on the data, the timing of rate cuts could be in September, December, or next year.

Furthermore, he forecasted that there will be no rate hikes within the year unless there is evidence that inflationary pressures are rising again. However, he also showed caution by stating, "We need to keep in mind that if inflation moves in a different direction, rate hikes could become appropriate."

This content was produced with the assistance of AI translation services.