FOMC member Logan comments today US monetary policy and rate cuts, signalling that inflation risk can temper Fed's dovish sentiments and dovish guidance.
- Spending, economic growth that's stronger than forecast poses upside risk to inflation
- Unwarranted further easing in financial conditions could also push demand out of balance with supply.
- The neutral Fed funds rate is uncertain; structural economic changes mean it may be higher than pre-pandemic.
- We remain attentive to inflation risks from supply chains, geopolitics and port strike.
- The US economy is strong and stable, but there are meaningful uncertainties around the outlook.
- As the labor market has cooled, we face more risk it will cool beyond what is needed to return inflation to 2%.
- Progress on inflation has been broad-based; the labor market has cooled and remains healthy.
- Inflation and the labor market are within striking distance of the Fed's goals.
- Upside risks to inflation mean the Fed should not rush to reduce rates.
- Recent trends in inflation for housing, other core services are encouraging and expected to come down over time.
- Less restrictive policy will help avoid cooling labor market more than necessary.
- Supported Fed's decision to begin normalizing policy by cutting the policy rate.
- We continue to see a meaningful risk inflation could get stuck above the Fed's 2% goal.
- Lowering the policy rate gradually would allow time to judge how restrictive monetary policy may or may not be.
- Normalizing policy gradually also allows the Fed to best balance labor market risks.
- Policy is not a preset, the Fed must remain nimble.
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