WASHINGTON, Nov 21, 2025 – Dallas Federal Reserve President Lorie Logan urged the U.S. central bank on Friday to hold interest rates steady “for a time” as policymakers assess the impact of current borrowing costs on the economy. Her remarks come amid heightened market speculation over a potential rate cut at the Federal Open Market Committee (FOMC) meeting on December 9-10.

Speaking in Zurich, Logan expressed caution over further reductions in interest rates, citing inflation that remains above the Fed’s 2% target and a labor market that is “roughly balanced”. She noted that even the October FOMC rate cut may not have been necessary.

“With two rate cuts now in place, I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly,” Logan said. “In the absence of clear evidence that justifies further easing, holding rates steady for a time would allow the FOMC to better assess the degree of restriction from current policy.”

Inflation and Labor Market Concerns

Logan highlighted that inflation remains a key concern, projecting it to average around 2.7% over the next year, above the Fed’s long-term target. She also emphasized that while some sectors of the labor market face challenges in matching workers to jobs, slower employment growth does not necessarily indicate more slack in the labor market. The recent resolution of the U.S. government shutdown has also reduced some near-term economic risks.

Elevated Asset Prices and Financial Conditions

The Dallas Fed president noted that soaring stock prices and compressed credit spreads suggest that financial conditions are providing tailwinds to economic growth, which in turn reduces the need for immediate monetary easing. Logan argued that the current federal funds rate must counteract these financial factors to maintain a balanced policy stance.

Market Reactions and Fed Divisions

Markets have reacted to Logan’s comments, with interest-rate futures reflecting renewed expectations of a potential December cut, reversing bets against a rate reduction earlier this week. The U.S. stock market ended sharply higher on Friday, with the Dow and S&P 500 up around 1% and the Nasdaq rising just under 1%.

Her remarks highlight the growing divide among Fed policymakers, with some advocating a third consecutive rate cut to support the labor market, while others, like Logan, prefer a more cautious approach to avoid stoking inflationary pressures.

“Elevated asset valuations and historically compressed credit spreads are not just indications that policy most likely isn’t very restrictive,” Logan said. “They’re also signals that the fed funds rate needs to offset tailwinds from financial conditions.”

Implications for U.S. Monetary Policy

As the FOMC prepares for its December meeting, Logan’s cautious stance suggests that markets may need to temper expectations of a quick return to lower interest rates. Her emphasis on balancing inflation control with economic growth underscores the Fed’s careful approach in managing monetary policy amid ongoing financial and labor market uncertainties.

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Key Takeaways:

• Dallas Fed President Lorie Logan favors holding rates steady before further cuts.
• Inflation remains above the Fed’s 2% target, projected at 2.7% over the next year.
• Slow job growth does not necessarily indicate excess labor market slack.
• Elevated asset valuations and compressed credit spreads require careful policy calibration.
• Markets reacted with gains in the Dow, S&P 500, and Nasdaq amid uncertainty over December rate moves.