Street Calls of the Week
Investing.com -- Dallas Federal Reserve Bank President Lorie Logan warned Friday that the central bank should avoid additional interest rate cuts due to ongoing inflation concerns and a balanced labor market.
Speaking at a conference hosted by the Dallas Fed, the University of Houston, and Banco de Mexico, Logan emphasized that monetary policy is currently "only modestly restrictive," which supports her cautious stance.
"We really need to be cautious of further rate cuts from here," Logan stated during her remarks.
Logan expressed particular concern about elevated non-housing services inflation, which she described as "worrisome." This persistent inflation suggests that even after tariff-driven goods inflation subsides, upward pressure on prices will likely continue.
She noted that stimulating demand when the labor market is "broadly in balance" would add to price pressures without boosting employment. Logan also pointed to risks that tariff effects could be more prolonged than expected, potentially raising long-term inflation expectations.
While acknowledging potential labor market risks, Logan emphasized that the Fed remains "furthest away" from achieving its inflation objective, suggesting this remains the primary concern for monetary policy decisions.
Logan also warned of possible upside risks to goods prices even after tariff effects fade, highlighting the complex inflation environment facing policymakers.