Dallas Fed President Doubles Down: ’High Interest Rates Are Here to Stay’

Another day, another Fed official clinging to rate hikes like a life raft. Dallas Fed President just declared high interest rates aren't going anywhere—because apparently the economy hasn't suffered enough.

Wall Street's favorite party pooper strikes again. While markets twitch at every CPI report, the Fed keeps playing inflation whack-a-mole with the blunt instrument of monetary policy. Because nothing solves supply chain issues like crushing demand, right?

Here's the kicker: this 'higher for longer' mantra comes as crypto markets show renewed vigor. Bitcoin's up 15% this month alone—seems some investors would rather trust code than central bankers with their money.

Logan calls for the urgency of lower rates sooner in a certain inflation scenario 

During her three years as the Federal Reserve Bank of Dallas’s CEO, Logan has always been careful about inflation issues in the bank’s operations. She recently suggested an inflation situation in which the bank needed to lower rates sooner.

Speaking at an event in San Antonio, Logan mentioned that a scenario with a mix of lower inflation and a weakening job market might soon lead to the need for lower interest rates. 

In the meantime, Federal officers have kept interest rates the same as they investigate the effects of Trump’s tariff policies on prices in a wait-and-see stance. For lawmakers, what has been challenging is the decision-making process concerning the steps to take for the remaining part of the year.

In June, federal officers conducted a median estimation on the rate cut issue. Nineteen of them anticipated two rate cuts for this year. On the other hand, the remaining nine expected one rate cut or no rate cut at all. This revealed that the division in their forecasts was largely due to the diversified anticipation of the effects of Trump’s tariff policies on inflation.

Additionally, data on consumer prices released Tuesday, July 15, indicated that last month’s basic price increase was smaller than expected. This indicated an unexpected trend that had been experienced in five consecutive months. 

Still, there was a prospect that companies were more often sharing some of the costs from tariffs with customers.

Logan warns against relying on positive brief inflation news

Logan commented on the data release on Tuesday, indicating a likelihood of increasing the federal benchmark price in June. She then warned of relying heavily on brief positive inflation news.

Based on her argument on brief positive inflation news, they created hope in the past, only to let people down when inflation rose. The CEO highlighted that she only needs to see low inflation last for a while before she gets fully convinced that all is well.

Besides inflation news, Logan also addressed concerns about federal officers’ independence. Interestingly, this has been a topic other officers have recently emphasized. Frequent criticism and US President Trump’s persistent requests for lower interest rates have brought this topic to the table.

Logan tried to explain this, stating that a central bank can increase jobs in the short term by lowering interest rates. Even so, based on her argument, cutting rates too much could increase prices, erasing the advantages of a strong job market.

Therefore, to maintain a healthy economy in the long run, she cautioned that a central bank must consider its decisions carefully.

Despite all this, this year’s qualitative data has greatly motivated federal officers as well as economic experts who were earlier expecting much worse results.

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