Logan Cautions Against Early Rate Cuts due to Inflation Uncertainty

During a question-and-answer session at the Louisiana Bankers Association Annual Conference, Federal Reserve Bank of Dallas President Lorie Logan stated that it is premature to consider reducing borrowing costs due to disappointing inflation data in the initial few months of the year. Logan further mentioned that there are uncertainties surrounding how restrictive policy currently is, and the Fed needs to stay flexible concerning future policy decisions while closely watching incoming data and monitoring financial conditions’ evolution. This comes after the Fed kept interest rates fixed within a range of 5.25% to 5.50% since July last year, with higher-than-expected inflation figures pushing back expectations for the first rate cut. In response to Logan’s remarks, Fed Chairman Jerome Powell recently stated that officials might need to maintain elevated interest rates for an extended period before contemplating cutting them. Earlier this month, Logan had also declared that it was “far too soon” to ponder reducing rates, expressing concerns about the slowdown in inflation reduction efforts.