Dallas Fed President Lorie Logan suggested at a BIS conference overnight that interest rates may remain on hold for “quite some time,” even if inflation continues to move closer to the 2% target. She emphasized that a decline in inflation alone would not be a sufficient trigger for policy easing, as long as labor market conditions remain strong.
She argued that such a scenario would “strongly suggest that” interest rate is
already pretty close to neutral, “without much near-term room for further cuts”.
Instead, Logan highlighted that signs of a weakening labor market or a slowdown in demand would be more relevant factors in determining when easing should begin.
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