Fed Logan sees that Fed rate may be close to neutral; signals cautious rate cuts 🔍

After the Fed Neel Kashkari comments, Lorie K.Logan, CEO of the US Federal Reserve Bank of Dallas. commented Fed policy and interest rates in the US. Logan's remarks on Wednesday were prepared before release of October US CPI reading.

• The rise in bond yields in part reflects a rise in term premiums; if the rise continues, the Fed may need a less restrictive policy.
• The labor market is cooling gradually, but not weakening materially.
• Upside risks to inflation and downside risk to employment point to financial conditions posing the biggest potential challenges for monetary policy.
• US central bank most likely will need more interest rate cuts, but should proceed cautiously.
• Models show that the Fed Funds Rate could be very close to the neutral rate.
• If the Fed cuts too far, past the neutral level, inflation could reaccelerate.
• It is difficult to know how many Fed rate cuts may be needed, and how soon they may need to happen.
• The Fed has made a great deal of progress bringing down inflation, restoring balance to the economy.
• The Fed is not quite back to price stability yet, and the US economic activity is resilient.