Not All Fed Officials Are In Favor of a Rapid Rate Cut

[Ben Graham]

Dallas Federal Reserve Bank President Lorie Logan said in an interview yesterday that she will take a very cautious approach to further rate cuts as long as inflation risks remain more significant than the threat of rising unemployment. "I see inflation running above our current 2% target," Logan said Thursday during a Q&A session at the University of Texas at Austin, adding that she expects tariffs to push inflation higher in the coming months.

"My forecast implies a somewhat slower normalization path so that we can reach 2%. So this will take some time," she said.

Logan's statement highlights growing concern among Fed officials about persistently high inflation despite earlier policy measures. Her cautious stance signals that the Fed is not prepared to rush into cutting rates, even if that may slow economic growth and potentially increase unemployment. Logan's position reflects the view of some policymakers that the priority remains price stability and reaching the inflation target. Further rate cuts in the context of high inflation could accelerate it, ultimately harming the economy and public well-being.

However, some experts believe the Fed is overestimating inflation risks while underestimating the threat of slowing economic growth. They argue that current measures are already sufficient to contain inflation, and further delays in rate cuts could lead to a recession. For this reason, after the first rate cut of the year in September, Fed policymakers hold very different opinions on how quickly to proceed with further reductions—or whether to proceed at all.

Logan indicated she may not support another cut when officials meet again on October 28–29. "It looks like policy is no more than moderately restrictive," she said, adding that this is appropriate given the Fed still needs to keep pressure on inflation to bring it down.

She acknowledged risks to employment but said the labor market overall appears "fairly balanced."

Current EUR/USD Technical Picture: Buyers now need to take control of the 1.1745 level. Only then will a test of 1.1790 be possible. From there, the pair could climb to 1.1820, though doing so without support from large market players will be difficult. The most distant target is the 1.1845 high. In case of a decline, I expect significant buying activity around 1.1710. If no strong buyers appear there, it may be better to wait for a retest of the 1.1680 low or consider opening long positions from 1.1650.

Current GBP/USD Technical Picture: Pound buyers need to break through the nearest resistance at 1.3450. Only then will a move toward 1.3500 be possible, though breaking higher will be quite challenging. The most distant target is the 1.3555 level. In the event of a decline, bears will attempt to regain control of 1.3400. If they succeed, a breakout of this range will deliver a serious blow to bullish positions and push GBP/USD down to the 1.3365 low, with the potential to extend toward 1.3325.

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