Logan Warns: Rates Must Stay High as Inflation Still Not Tamed — Trump’s Pressure Mounts
Dallas Fed President Lorie Logan reiterated yesterday that interest rates must remain elevated until the central bank is fully confident that inflation is under control. At the same time, she acknowledged that a significant weakening in both inflation and the labor market could justify cutting rates in the near future.
Her comments come at a time when U.S. monetary policy is under increasing pressure — not only from economic indicators but also from growing criticism by President Donald Trump.
📉 Inflation Is Slowing, but Logan Urges Caution
Speaking at an event in San Antonio, Logan emphasized that the Fed’s current policy should stay tight for a while longer. While inflation has slowed down recently, she warned that short-term positive data shouldn’t lead to premature decisions.
“In the past, we’ve seen short stretches of low inflation spark hope — only to disappoint when inflation returned,” Logan said.
“We need sustained evidence before making any major moves.”
She added that the U.S. economy can remain strong even under moderately restrictive conditions, and employment levels are still healthy.
🧮 Trump’s Tariffs Add Complexity, Fed Remains Split
The Fed is also closely monitoring the potential impact of Donald Trump’s new wave of tariffs. Many economists warn that tariffs could push prices higher if businesses start passing the added costs onto consumers.
In June, Fed officials issued updated projections: 19 of them predicted two rate cuts this year, while 9 others expected just one or none at all. The divergence largely reflects uncertainty over how Trump’s trade policies might affect inflation.
📊 July 15 CPI Data Surprises to the Downside
Consumer inflation data released on July 15 showed that core price increases were lower than expected, marking the fifth straight month of a cooling trend. This has raised hopes that the Fed might consider easing sooner.
Still, Logan remains skeptical. She made it clear that rate cuts should only be on the table if this trend persists and is accompanied by a weakening labor market.
⚖️ Fed Independence Under Threat as Trump Increases Pressure
Logan also addressed concerns over the Fed’s independence, a topic that’s gained traction recently as President Trump continues publicly pressuring the Fed to lower rates.
“Yes, rate cuts can boost employment in the short term,” Logan admitted.
“But if policy becomes too loose, it could reignite inflation and undo the benefits of a strong labor market.”
🔍 The Fed Faces Tough Decisions Ahead
Despite political tension and differing views within the Fed, there is general consensus that this year’s economic data has exceeded expectations. Logan, however, urges caution, consistency, and resilience against political interference to ensure long-term credibility and effective inflation control.
📌 Quick Recap:
🔹 Logan: Rates must remain high — inflation isn’t defeated yet
🔹 Trump’s tariffs divide the Fed and increase pressure for cuts
🔹 July CPI data showed cooling, but Logan warns against premature optimism
🔹 Fed split: most expect 1–2 rate cuts this year
🔹 Central bank independence under growing political scrutiny
#FederalReserve , #Inflation , #TRUMP , #Tariffs , #economy
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