PALM DESERT, California - Dallas Federal Reserve Bank President Lorie Logan reiterated her stance that the Fed should not necessarily lower interest rates even if inflation approaches its 2% target in the near term.
"There's a real question about the current restrictiveness of monetary policy," Logan stated at a Southern Methodist University banking conference in Palm Desert, California. "We need to proceed cautiously."
Logan acknowledged the uncertainty surrounding inflation's trajectory, noting the historical pattern of higher inflation during the start of the year, when companies typically implement price increases.
Data released this week showed that U.S. consumer inflation in January reached its highest rate in nearly a year and a half.
Additionally, Logan cited bank surveys indicating strong optimism about economic growth and loan demand, suggesting potential upward inflationary pressures.
The labor market remains robust, with the unemployment rate in January falling to 4.1%.
"We're in a solid position to monitor data over the coming months and assess the potential evolution of these changes," Logan said.
She expressed concern about the recent rise in long-term borrowing costs, attributing it to expectations of stronger growth and possibly inflation fears.
However, Logan does not believe that financial conditions warrant immediate rate cuts from the Fed.
"Our primary focus is to ensure that inflation remains at our 2% target," she concluded.