While testing LOG-2236 I noticed that the Degraded conditions are immediately reset to False when no additional error is emitted by handlers.CreateOrUpdateLokiStack() and there are either no deployments created by loki-operator yet or they are still "okay" as seen from the last successful reconciliation run.

It seems this is because the last reconciliation step (status.Refresh()) is only looking at the pod statuses and not taking other error conditions into account.