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Investing.com -- Dallas Federal Reserve President Lorie Logan said Friday she did not support the central bank’s decision to cut interest rates this week and would find it difficult to back another reduction in December.
"This economic outlook didn’t call for cutting rates," Logan said in remarks prepared for a Dallas Fed banking conference. "I did not see a need to cut rates this week."
The Federal Reserve lowered its policy rate on Wednesday by a quarter percentage point to a range of 3.75%-4.00%, marking the second cut this year. Fed Chair Jerome Powell indicated the move aimed to prevent further labor market slowdown.
Logan, who does not have a vote on the Fed’s policy committee this year, said she would struggle to support another rate cut in December "unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly."
She described the current labor market as "roughly balanced" and cooling slowly, with risks "mainly to the downside." Logan noted that layoffs and unemployment claims have remained low, despite recent layoff announcements.
The Dallas Fed president expressed concern that inflation remains "too high and likely to exceed 2% goal for too much longer," adding that it is not convincingly headed toward the central bank’s target.
Logan said consumer spending slightly exceeds the longer-run trend, with stock market gains fueling demand from wealthier households. She estimated that breakeven payroll growth has likely fallen to 30,000 jobs per month.
Despite her opposition to the rate cut, Logan supported the Fed’s decision to end its balance sheet runoff, noting the balance sheet is "much closer to normal size." She suggested dealers may need to increase readiness to access the standing repo facility.