Dallas Fed President Lorie Logan believes that the 25 bps rate cut earlier this week was uncalled for, citing a balanced labor market, inflation above the central bank’s 2% target, and a previous rate cut in September.
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“For those reasons, I did not see a need to cut rates this week,” said Logan at The Evolving Landscape of Bank Funding conference in Dallas. “And I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly.”
Logan Aligns with Fed’s Schmid and Urges Caution on Rate Cuts
Logan, who did not vote in the October Federal Open Market Committee (FOMC) meeting, echoes the views of Fed Bank of Kansas City President Jeff Schmid. Schmid was the only voting October FOMC member to call for an unchanged interest rate and also believes that labor demand and supply are balanced amid the risk of rising inflation.
Schmid added that the effects of a 25 bps rate cut on the labor market are limited, although it could have “longer-lasting effects on inflation.”
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