US economic activity is resilient

Dallas Federal Reserve President Lorie Logan urged caution on Wednesday, advising the bank to move slowly with additional rate cuts to avoid unintentionally stoking inflation.

Key Quotes

– US central bank ‘most likely’ will need more interest rate cuts, but should ‘proceed cautiously’.

– Models show that Fed Funds rate could be ‘very close’ to neutral rate.

– If Fed cuts too far, past neutral level, inflation could reaccelerate.

– Difficult to know how many Fed rate cuts may be needed, and how soon they may need to happen.

– Fed has made ‘great deal of progress’ bringing down inflation, restoring balance to economy.

– Fed is not quite back to price stability yet.

– U.S. economic activity is ‘resilient.’

– Labor market ‘cooling gradually’ but not weakening materially.

– Rise in bond yields in part reflects rise in term premiums; if rise continues, Fed may need less restrictive policy.