Fed’s Logan says inflation, not jobs, now bigger risk

Dallas Fed President Lorie Logan struck a cautious tone on further easing, arguing that downside risks to the US labor market “appear to have meaningfully dissipated” following last year’s three interest-rate cuts. Speaking overnight, Logan said those moves had helped stabilize employment conditions but had also introduced fresh risks on the inflation side.

While she expects inflation to make progress this year, Logan laid out a series of concerns that argue against complacency. She pointed to pending tariff effects, supportive fiscal policy, buoyant financial conditions, and the possibility that deregulation and new technologies could add to price pressures rather than dampen them.

Against that backdrop, Logan said she is “cautiously optimistic” that the Fed’s current policy stance can steer inflation back toward its 2% target without destabilizing the labor market. The next few months of data, she stressed, will be critical in determining whether that balance is being achieved.

For now, her bias is clearly toward holding steady. If inflation slows while the labor market weakens materially, further cuts could become appropriate. But as things stand, Logan said, “I am more worried about inflation remaining stubbornly high.”