Fed's Logan: We need to be very cautious about rate cuts

Dallas Federal Reserve (Fed) President Lorie Logan explained on Thursday that the recent interest rate cut was an insurance against a more rapid, non-linear decline in the labor market, per Reuters.

Key takeaways

"Inflation is running above target, trending higher."

"Payroll gains have declined markedly."

"See risks on both sides of the Fed's mandate."

"Demand remains pretty resilient."

"Labor market looks fairly balanced, only gradually slowing."

"Policy isn't more than modestly restrictive, which is appropriate."

"We need to be very cautious about rate cuts."

"Must not ease too much, only to have to reverse course."

"Very close to maximum employment."

"Appropriate to see a little more cooling in labor market."

"Seeing risks that labor market is more fragile, that's why insurance rate cut was appropriate."

"Tariffs have contributed to higher inflation recently, through goods inflation."

"Overall tariff effects on inflation have been more moderate than had anticipated."

"Even if tariffs have one-time effect, the longer it takes and uncertainty continues the higher the risk to inflation expectations."

"We need to guard against the risk that inflation expectations could rise."

Market reaction

These comments received a hawkish score of 6.8 from FXStreet Fed Speech Tracker. Meanwhile, the US Dollar Index extends its recovery following these comments and was last seen gaining 0.25% on the day at 97.95.