Two senior Federal Reserve officials hinted on Thursday (September 7th) that the Fed will keep interest rates unchanged at its September meeting. However, they refused to declare victory in the fight against inflation.

Lorie Logan, Chairman of the Dallas Fed and voting member of the Federal Open Market Committee (FOMC) in 2023, became the latest official to support keeping the benchmark interest rate at a 22-year high at the FOMC meeting later this month.

I don't believe we have eliminated excessive inflation yet, "Logan said at an event at the Dallas Business Club." But in today's complex economic environment, bringing inflation back to 2% will require a carefully calibrated approach - rather than endlessly pouring cold water

Logan expressed appreciation for the Federal Reserve's decision to slow down the pace of interest rate hikes at its June meeting. At that time, the Federal Reserve did not raise interest rates, but resumed tightening policies in July.

She said, "It may be appropriate to skip raising interest rates again when we meet later this month," and Logan is considered one of the most hawkish officials at the Federal Reserve.

Although Logan insists that the job market and economic momentum remain strong, she also points out that the recent tightening of the financial environment may have offset the need for further interest rate hikes.

Before Logan's remarks, New York Fed Chairman and permanent voting member of the FOMC, John Williams, stated on Thursday that monetary policy is in a "good state". Williams is also the "number three figure" of the Federal Reserve.

Williams stated that the Federal Reserve will closely analyze the upcoming data to determine whether the federal funds rate is at a "sufficiently restrictive" level to control inflation in a timely manner.

Williams said, "Our policies are good, but we still need to rely on economic data to make decisions. We must continue to observe the data, carefully analyze all of this, and seriously ask ourselves a question: Is the policy sufficiently restrictive? Do we need to raise interest rates again to ensure steady progress in correcting labor imbalances and lowering inflation targets

According to pricing in the futures market, investors expect the Federal Reserve to maintain interest rates unchanged again during its policy meeting on September 19-20. Prior to this, decision-makers will have more economic data to evaluate, including inflation data.

There is still work to be done to reduce inflation

Logan emphasized that the recent easing of price pressures may not necessarily translate into "sufficiently low inflation", and added that "there is still work to be done", which is the clearest sign that the Federal Reserve may need to tighten the money supply later this year.

She stated that the decrease in inflation rate is "encouraging", but may not be low enough, especially with the labor market still strong. In the coming months, further assessments of data and prospects may confirm that the Federal Reserve needs to take more measures to eliminate inflation.

Logan said, "The essence of forecasting is uncertainty. However, my benchmark estimate is that there is still a lot of work to be done. The price increases of the past few years are unacceptable, and I still don't believe we have eliminated excessive inflation

Since March 2022, the Federal Reserve has raised interest rates 11 times, and the current federal funds rate is in the range of 5.25% to 5.5%. Federal Reserve Chairman Jay Powell also stated that the Fed should make further decisions "cautiously".

Another hawkish figure, Federal Reserve Governor Christopher Waller, also supports this approach.

Earlier this week, Waller stated that although it is too early to say whether the recent slowdown in inflation is a "trend" or just a "fluke," US economic data does not indicate that the Federal Reserve needs to take any "urgent" action on monetary tightening.

Before we see inflation continuing along this trajectory for several months, I want to be very cautious and say that we have completed the work of curbing inflation, "Waller said in an interview with CNBC on Tuesday