(Bloomberg) -- Federal Reserve Bank of Dallas President Lorie Logan said it’s still too early to think about lowering borrowing costs given disappointing inflation data in the first few months of the year.

Logan, speaking in a question-and-answer session at the Louisiana Bankers Association Annual Conference, also said it’s uncertain how restrictive policy is currently, and that the economy’s resilience was surprising given the high rates.

“It’s just too early to think about cutting rates,” Logan said Friday at the event in New Orleans. “I need to see some of these uncertainties resolved about the path that we’re on and we need to remain very flexible to policy and continue to look at the data that’s coming in and watch how financial conditions are evolving.”

Fed officials have kept interest rates unchanged in a range of 5.25% to 5.5% since their July meeting. Higher-than-forecast inflation data earlier this year has pushed back expectations for the first rate cut. 

Chair Jerome Powell, speaking after the central bank’s April 30-May 1 meeting, said policymakers would likely keep rates high for some time, adding he wasn’t sure how long it would take for him and his colleagues to gain the confidence to lower rates.

Logan said the economy’s strength in the face of higher rates could be explained by the unwinding of pandemic-era supply-chain issues or a normalizing in the labor market following very tight conditions in the Covid recovery.

“It also could be because the neutral level of interest rates has really risen,” Logan said, referring to the level where rates neither restrict nor stimulate the economy. “We’re starting to accumulate evidence that might suggest that that level is higher than it was before.”

Logan had said in early April that it was “much too soon” to think about cutting rates, and has expressed concern that progress on cooling inflation is stalling out. She isn’t a voter on this year’s Federal Open Market Committee.

Earlier Friday, Fed Governor Michelle Bowman said the central bank should proceed “carefully and deliberately” as policymakers move toward the 2% inflation goal. 

US consumers are also worried about price pressures. Consumer sentiment declined in early May to a six-month low as short-term inflation expectations and concerns about the job market picked up.

Discount Window

Logan reiterated that every US bank should be set up to borrow from the Fed’s emergency lending facility, known as the discount window — something not all institutions were prepared to do during last year’s banking crisis.

“It’s critically important that banks have a broad and diverse set of funding arrangements and I think one of those arrangements has to be the discount window,” Logan said. “We want to see every bank signed up, we want to see every bank testing those arrangements from time to time.”

Fed officials have been trying to reduce the stigma typically associated with using the discount window — long seen by markets as a last resort and signal of distress — and have encouraged institutions to see it as a tool in their liquidity arsenal. 

US regulators have been working to introduce a plan to require banks to tap the Fed’s facility at least once a year, Bloomberg reported in January. 

(Updates with more comments from second paragraph)

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