There are still real risks of rising inflation.

Federal Reserve Bank of Dallas President Lorie Logan said Wednesday that she supported last month’s substantial interest rate cut but favored smaller cuts in the future. She pointed out that there were “still real” upside risks to inflation and pointed to “significant uncertainties” around the economic outlook.

Key quotes

The “more gradual path” of rate cuts is probably appropriate from here.
Rising inflation risks mean the Fed should not rush to cut rates.
The gradual lowering of the monetary policy rate would allow time to assess how restrictive monetary policy may or may not be.
Policy normalization also allows to “best balance” labor market risks.
Policy is not “set”, the Fed must remain nimble.
It supported the Fed’s decision to begin policy normalization by cutting the policy rate.
A less restrictive policy will help avoid cooling the labor market more than necessary.
Progress on inflation has been comprehensive; the labor market has cooled, it remains healthy.
Inflation, labor market ‘striking distance’ from Fed targets.
Recent trends in housing inflation, another “encouraging” core services, are expected to ease over time.
The US economy is “strong and stable” but there are “significant uncertainties” about the outlook.
Spending, economic growth that is stronger than expected is a positive risk for inflation.
Unwarranted further easing of financial conditions could also unbalance demand with supply.
The “neutral” federal funds rate is uncertain; structural economic changes mean it may be higher than pre-pandemic.
Stay alert to inflation risks from supply chains, geopolitics and port strikes.
As the labor market has cooled, we face greater risk that it will cool beyond what is needed to bring inflation back to 2%.