Dallas Federal Reserve President Lorie Logan has expressed uncertainty regarding the future direction of US monetary policy. Speaking at Columbia University, Logan stated that while she anticipates inflationary pressures to ease as the effects of tariffs diminish, she remains undecided on the appropriate next step for monetary policy. Logan added she was “cautiously optimistic” that the current monetary policy stance will return inflation to the 2% target.
Logan highlighted several factors contributing to this uncertainty. The impact of current tariffs on the economy, and the implications of the Supreme Court’s invalidation of many of former President Trump’s import taxes, add complexity to the outlook. Furthermore, she noted the potential for strong business investment in artificial intelligence and robust consumer spending to outpace supply, preventing inflation from falling to the desired level. The Fed lowered its benchmark interest rate last year to the current 3.50%-3.75% range.
Addressing technical considerations, Logan discussed the Fed’s management of money market liquidity and the possibility that technological advancements in payment systems and regulatory changes could reduce the need for financial institutions to hold large reserves. She also reiterated her support for shifting the Fed’s monetary policy target from the federal funds rate to a repo market rate, which she believes provides clearer signals about money market conditions. Logan holds a vote on the rate-setting Federal Open Market Committee this year and supported holding rates steady at the end of January.
