Federal Reserve's Logan Expresses Cautious Optimism on Inflation and Employment

Federal Reserve official Logan expressed cautious optimism regarding the current policy rate's ability to stabilize the job market while reducing inflation to the 2% target. According to Jin10, Logan stated that upcoming economic data will test this assessment. She mentioned that if the situation aligns, it would indicate that the current policy stance is appropriate, potentially achieving dual mandate goals without further rate cuts. However, she noted that if inflation decreases alongside a significant cooling of the labor market, additional rate cuts might become suitable. Currently, her primary concern is the persistently high inflation. Logan highlighted that after three rate cuts last year, the downside risks to the labor market seem to have significantly eased, although this has introduced additional risks concerning inflation. She pointed out that with short-term borrowing costs now estimated to be within a 'neutral' policy range, the current interest rate level has limited restraining effects on the robustly rebounding economy and inflation, which has remained above the Federal Reserve's target for nearly five years. Logan anticipates progress in inflation this year, with some initial signs of improvement already visible.