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Dallas Fed President Logan Questions Need For Rate Cuts

Then-Dallas Fed President Robert Kaplan speaks at the Commonwealth Club in San Francisco in 2019

Dallas Federal Reserve President Lorie Logan has expressed skepticism about the necessity of rate cuts this year, aligning with a growing number of Fed officials who share similar sentiments. In response to the recent robust jobs report, Logan stated that it is premature to consider lowering interest rates at this time.

One of Logan's primary concerns is the risk of inflation persisting above the Federal Reserve's target of 2%. While she acknowledged that recent inflation data has raised some alarms, she clarified that it is not her base case scenario.

Despite market expectations for three rate cuts in 2019 based on projections from the previous meeting, the timing of the first cut remains uncertain. This uncertainty stems from the fact that inflation continues to exceed the 2% target, and the labor market remains robust, prompting caution among policymakers.

Minneapolis Fed President Neel Kashkari also cast doubt on the necessity of rate cuts, particularly if inflation remains stagnant. While Kashkari anticipates two rate cuts this year, he emphasized the importance of monitoring inflation trends before implementing any policy changes. Neither Kashkari nor Logan hold voting positions on the Fed's rate-setting committee this year.

Contrary to Logan and Kashkari's views, Atlanta Fed President Raphael Bostic, a voting member, advocates for a single rate cut in 2019. Bostic's stance reflects a divergence of opinions within the Fed regarding the appropriate course of action in response to economic conditions.

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