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Senior Federal Reserve officials signaled Thursday that the U.S. central bank would keep interest rates steady at its September meeting, even as they refused to declare victory in the fight against inflation.
Lorie Logan, president of the Dallas Fed and a voting member of the Federal Open Market Committee, became the latest official to signal support for the central bank to keep its benchmark interest rate at a 22-year high when the FOMC meets later this month.
“I am not yet convinced that we have eradicated excessive inflation. But in today’s complex economic environment, returning inflation to 2 percent requires a carefully tailored approach – not endless buckets of cold water,” she said at a Dallas Business Club event.
Logan praised the decision to slow the pace of rate hikes at the June meeting, when the Fed skipped a hike only to resume tightening in July.
“Another jump may be in order when we meet later this month,” she said.
Logan, considered one of the Fed’s most hawkish officials, also noted that recent tightening of financial conditions may offset the need for further interest rate hikes, even as she maintained that momentum in the labor market and economy remains strong.
Logan’s comments followed those of John Williams, president of the New York Fed and consistent FOMC voter, who said Thursday that monetary policy was in a “good place.”
Williams said the Fed will closely analyze incoming data to determine whether the key interest rate is at a level deemed “sufficiently restrictive” to bring inflation under control in a timely manner.
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Logan stressed that the recent easing in price pressures would not necessarily lead to “sufficiently low inflation,” adding that there was still “work to be done.”
After eleven interest rate increases since March 2022, the federal funds rate has settled between 5.25 and 5.5 percent. Fed Chairman Jay Powell also said the central bank should approach further decisions “carefully.”
Christopher Waller, another hawkish Fed governor, also agrees with this approach. He said this week that U.S. economic data did not indicate that the Fed needed to take any “immediate action” in terms of tightening monetary policy, although it was too early to say whether the recent moderation in inflation would be a ” trend” or just a “coincidence”. .
“I want to be very careful when I say we’ve somewhat managed inflation until we see this trend continue for a few more months,” Waller said in an interview with CNBC on Tuesday.