Risks more balanced, no urgency on rate cuts

HURST, Texas (Reuters): Dallas Federal Reserve Bank President Lorie Logan said she is in no rush to cut interest rates, and while there has been “tremendous progress” on bringing down inflation, she wants more data to confirm the progress is durable.

“The risks that I’m seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data,” she said at the Tarrant Transportation Summit in Hurst, Texas.

She said she supported the Fed’s decision last month to leave the policy rate on hold in the 5.25%-5.5% range, even as Fed Chair Jerome Powell signaled that rate cuts are likely later this year.

“I’m really not seeing any urgency to make any additional adjustments at this time,” she said, adding that the labor market is still tight and she wants to “build our confidence whether the progress that we’ve seen on inflation will be sustained over the medium term.”

It’s a refrain that many of Logan’s colleagues – including fellow hawks like Richmond Fed President Thomas Barkin as well as the more dovish-leaning Atlanta Fed President Raphael Bostic – have voiced of late: that there is still more work to do on bringing down inflation, and the economy’s strength means the Fed can hold rates where they are to maintain that downward pressure on prices.

Inflation is at the Fed’s 2% goal as measured on a six-month annualized basis, she noted, and even on a year-over-year basis it is below 3%.

“I think we are in a good place,” she said, with a “fairly benign outlook, with inflation continuing to be sustained near our target, with healthy growth and a labor market that’s loosening but still robust.”

But there are risks, Logan said, including the potential for geopolitical stresses or renewed supply chain problems to stall or reverse progress on inflation.

Logan said the Fed’s ongoing shrinking of its balance sheet has been “going well,” though she did not offer any details or provide her views on the outlook for when the Fed may slow or end that process.