In a speech delivered at the Louisiana Bankers Association conference, Dallas Federal Reserve President Lorie Logan expressed uncertainty regarding whether current Federal Reserve policy is sufficient to bring inflation down to the central bank’s target of 2%. She acknowledged the existence of “important upside risks to inflation” and stated that “there are uncertainties about how restrictive policy is and whether it’s sufficiently restrictive”. Although many US central bank officials, including Chair Jerome Powell, maintain that further rate hikes may not be necessary, Logan suggested that it could be too soon to consider rate cuts. Meanwhile, data released by the University of Michigan revealed a rise in year-ahead inflation expectations, potentially challenging the Fed’s view that such expectations are “anchored”. Other Fed officials, such as Raphael Bostic and Neel Kashkari, have similarly questioned whether interest rates are high enough to combat inflation, whilst Mary Daly suggested that although the “neutral” interest rate for the US may have risen, the Federal Reserve should continue keeping its policy rate at its current level for longer.
Based on the latest information, it seems that debate over whether US interest rates are high enough to tackle inflation is still ongoing within the Fed. Inflation concerns have led some officials, like Logan and Kashkari, to suggest that rates may not be restrictive enough, potentially necessitating further hikes. Nonetheless, others, such as Bostic and Powell, believe that rates have reached a sufficient level. As inflation data continues to be closely watched by Fed policymakers, it remains uncertain whether or not further rate adjustments are required.
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