The Fed to stop cutting interest rates? Fed officials shout 'strong employment, inflation close to 2%' has reached the neutral Intrerest Rate

Dallas Federal Reserve President Logan pointed out at the BIS meeting that with the slowdown in inflation and a stable labor market, the Fed Benchmark Interest Rate may have approached a neutral level, with limited room for further rate cuts in the short term. She emphasized that even if inflation approaches the 2% target in the coming months, it is not sufficient to prompt the Fed to cut interest rates unless there are signs of deterioration in the labor market. (Background: FOMC Director Waller: Stable Coin helps consolidate the US dollar's position as a 'global reserve coin', Central Bank does not need to issue CBDC) (Background: Legendary shorts: Signs of a stock market bubble have been observed, and the biggest risk in the next year is a Deepseek-like effect) The US Department of Labor announced on Wednesday (5th) that ADP employment data showed that the number of employees in the private sector increased by 183,000 in January after seasonal adjustment, marking the largest increase since October last year, and exceeding economists' expectations of 148,000. Subsequently, the US Department of Labor announced yesterday (6th) that in the week ending February 1st, the number of initial claims for unemployment benefits increased by 11,000 to 219,000, higher than the market's expectation of 215,000. These data indicate that the US labor market remains resilient, with overall strong employment growth. Fed official Logan: Interest Rate close to neutral, limited room for rate cuts in the short term Against this background, Dallas Federal Reserve Bank President Logan pointed out at the bank for international settlements (BIS) meeting held in Mexico City that with strong demand and a stable labor market, the inflation rate is gradually approaching the Fed's target, indicating that the Fed's Benchmark policy Interest Rate may have approached a neutral level. She emphasized that if this trend continues, there is limited room for further rate cuts in the short term: 'What if the inflation rate approaches 2% in the coming months? Although this is good news, in my opinion, it may not be enough to prompt the FOMC to cut interest rates quickly.' Logan's remarks were unexpected, as despite the continued cooling of inflation, it may not be necessary to further cut interest rates because the Benchmark Interest Rate may have approached a neutral level. The neutral Interest Rate is the central bank's policy Interest Rate that does not stimulate or suppress economic activity. In other words, when the Interest Rate is maintained at this level, the economy can develop steadily at its potential growth rate without generating overheating or deflationary pressures. However, she also added that if there are signs of deterioration in the labor market, the Fed may consider cutting rates. Overall, she is reserved about cutting interest rates only because of improved inflation and believes that the performance of the labor market is also a key indicator to watch. Currently, the US labor market remains strong, with the unemployment rate dropping from 4.2% to 4.1% in December. Logan's remarks are worth following. It is worth mentioning that Logan's public remarks are closely followed, as she is seen as a potential candidate to exert greater influence in the 'post-Powell era'. She has played a core role in stabilizing the market at critical moments. For example, in early 2024, she publicly advocated slowing down the pace of balance sheet reduction to avoid a repeat of the 2019 turmoil in the bond market. This proposal was eventually adopted by the Fed, demonstrating the weight of her views in influencing policy direction. Some Fed observers believe that Logan may succeed Williams, the New York Fed President and FOMC Vice Chairman, in 2028, and rise to a core position with voting rights for Interest Rate decisions. If successful, she is expected to become an important driver of Fed policy after Powell's term ends in 2026. Therefore, when Logan stated in her speech that 'even if the inflation rate approaches 2%, this may not be enough to prompt the FOMC to cut rates' and emphasized closely following the labor market, this is not only a sharing of policy views, but may also become a barometer for the future direction of Fed Interest Rate policy. Tonight, the US Department of Labor will release employment data for January. Economists expect the pace of employment growth to slow, with an estimated addition of 169,000 people, lower than the 256,000 in December, but basically in line with the average level of the past three months, and the unemployment rate is expected to remain at 4.1%. Related report: Arthur Hayes warns: BTC reserves 'may become a political nuclear weapon', Democratic victory or close all positionsdumping Central Bank hawks: Interest Rate should be raised to at least 1% by 2025, with the Japanese coin breaking 152 to reach a two-month high The US Federal Deposit Insurance(FDIC) will modify and delete 'encryption discrimination policies', Acting Chairman: Banks should not be prevented from accessing Blockchain (Fed stops cutting rates? Fed official shouts 'strong employment, inflation near 2%' has reached a neutral Interest Rate)