Logan noted that even with the current “modestly restrictive” monetary policy, the US job market can still achieve its maximum employment level. She cautioned that cutting rates too soon could prolong the time it takes for inflation to return to its target, and might even increase economic volatility. In prepared remarks, Logan emphasized that if future economic data shows inflation slowing more than anticipated, the Fed could adjust its policy by cutting rates further to prevent the US job market from derailing. However, she also warned that recent signs of a cooling labor market, along with declining business and household confidence in the US, could indicate weakening economic activity.
Regarding the impact of tariffs on inflation, Logan believes their effects might not be as “large or persistent” as expected. Nevertheless, the latest data reveals that the US Consumer Price Index (CPI) rose by 2.7 percent year-over-year in June, slightly up from 2.4 percent in May. This increase reflects rising costs for energy and certain goods, with particular attention on price increases in categories heavily impacted by tariffs, such as furniture and apparel.
Notably, the CPI increased by 0.3 percent month-over-month in June, and the core CPI (excluding food and energy) rose by 0.2 percent month-over-month. Both figures show an accelerated pace compared to May, indicating that inflationary pressures have not significantly eased.
The US government has attempted to downplay the inflationary impact of tariffs, with Treasury officials even referring to market concerns as “tariff-aversion syndrome.” Economists, however, continue to warn that tariffs could simultaneously drive up prices and stifle economic growth in the US.
The US Federal Reserve currently faces a critical policy decision. It must prevent inflation from rebounding due to premature policy easing, while also avoiding an overly tight policy that could cause the US economy to slow down. Logan’s remarks suggest that Fed officials are closely monitoring various economic indicators to adjust policy as needed.
