Finance Association, October 10 (Editor Bian Chun) 2026 FOMC voting committee and US Dallas Federal Reserve Chairman Lorie Logan (Lorie Logan) said on Wednesday that she supports the sharp interest rate cut last month, but hopes to cut interest rates by a smaller margin in the future, as the risk of rising inflation “is still real” and the economic outlook “has significant uncertainty”.

“After the federal funds rate was cut by 50 basis points last month, it may be appropriate to take a more gradual approach to return to normal policy positions from now on to best balance the risks of our dual mission goals,” Logan said.

This is her first public speech since the Federal Reserve lowered the policy interest rate to the 4.75%-5.00% range three weeks ago.

She said that the Federal Reserve “should not rush to lower the federal funds target to a 'normal' or 'neutral' level, but should gradually cut interest rates while monitoring financial conditions, consumption, wage and price behavior.”

“I still think there is a significant risk that inflation will stay above 2%.” Logan said.

Logan cites a range of reasons to slow interest rate hikes, although she admits there is a risk of “excessive cooling” in the labor market.

She pointed out that consumer spending or economic growth may be stronger than expected; financial conditions may be further relaxed “unfounded”; furthermore, the level of borrowing costs that will neither reduce nor increase economic growth — that is, “neutral interest rates” — may be higher than pre-pandemic levels.

She said other upward inflation risks include geopolitical risks and the resurgence of supply chain issues caused by the East Coast dock workers' strike, and indicated that workers and port operators plan to re-examine their contracts in January.

“The downside risk in the labor market has increased, while the upward risk of inflation has weakened, but it still exists.” Logan said. Her remarks suggest that she is still concerned that inflationary pressure may resurface.

She added that the policy path should not follow a predetermined line and that the Federal Reserve “needs to be flexible and willing to make adjustments when appropriate.”

Last month, the Federal Reserve cut interest rates for the first time in four years, cutting the federal funds rate by 50 basis points. But the strong non-farm payrolls report for September released last Friday opened room for policymakers to slow down the pace of action.

Expectations that the Federal Reserve will cut interest rates by 25 basis points at the next policy meeting have clearly heated up after the release of the non-agricultural report. According to the Chicago Mercantile Exchange's US Federal Reserve observation tool, traders currently expect the probability of cutting interest rates by 25 basis points in November to be about 80.3%, and the probability of not cutting interest rates by 19.7%, while the possibility of cutting interest rates by 50 basis points has dropped to 0. A week ago, this possibility was as high as 35.2%.

The minutes of the latest meeting released by the Federal Reserve late Wednesday show that three weeks ago there were huge differences within the Federal Reserve over the decision to cut interest rates drastically. Although in the end, only one person voted against cutting interest rates by 50 basis points, during discussions at the conference, “some” policymakers supported a more conventional 25 basis point cut in interest rates.