(Reuters) – The U.S. Federal Reserve (Fed) will need to be cautious about further interest rate cuts to avoid inadvertently boosting inflation, Dallas branch president Lorie Logan said on Wednesday. .
“I think the FOMC (Fed Monetary Policy Committee) will most likely need to make further rate cuts to complete its mission,” she said in a paper prepared for a conference speech. on energy at the Dallas Fed.
But, she added, “it is difficult to know with certainty how many cuts will be necessary and how soon they will have to occur.”
US inflation, which had risen to a 40-year peak, has largely declined, falling to 2.6% in October, according to official consumer price data (CPI) published on Wednesday.
Last week, the Fed lowered the Fed funds rate target to 4.50%-4.75% – a level seen by Lorie Logan as being “just at the top” of the estimated neutral rate range, that is to say one which neither slows down nor stimulates the economy.
“If we go too far, beyond the neutral rate, inflation could accelerate again and the FOMC may have to backtrack,” she said.
“In these uncertain but potentially very shallow waters, I think it is best to proceed with caution,” she added.
(Written by Ann Saphir; Claude Chendjou, edited by Blandine Hénault)
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