Lorie Logan, president of the Federal Reserve Bank of Dallas, said Tuesday her outlook supports at least two further 25-basis-point rate increases, as inflation remains above the Federal Reserve’s 2% goal.
She said the Fed could move more quickly over the winter, depending on changes in economic and financial conditions. Logan would reassess the outlook after those increases before deciding whether another step made sense. Her remarks reflect her own policy view and do not determine what the Federal Open Market Committee (FOMC) will do.
The FOMC held its target range at 3.75% to 4% on Oct. 28, after raising it by a quarter point in September. Logan put the gap between the current range and what she considers a mildly restrictive setting at 50 basis points or more. Her latest remarks continue Logan’s earlier argument for more rate increases before a pause.
Logan cited personal consumption expenditures (PCE) inflation of 3.6% over the 12 months through September and core PCE inflation, which excludes food and energy, of 3.1%. The U.S. Bureau of Labor Statistics (BLS) reported Tuesday that the Consumer Price Index (CPI) rose 0.4% in October from September on a seasonally adjusted basis. The CPI measure excluding food and energy rose 0.3%. Logan said the CPI reading was higher than she expected and that she was concerned October PCE inflation could rise when those figures are released; the October PCE data were not yet available.
She also pointed to third-quarter real gross domestic product (GDP) growth at a 3.4% annual rate and unemployment just above 4%. Logan described the labor market as broadly balanced, with some signs of tightening. She cited energy costs, goods affected by tariffs and services prices as sources of inflation pressure, and warned that persistent increases could become embedded in wage and pricing decisions.
Logan said inflation’s effects reach families, businesses and taxpayers, and that some workers’ pay has lagged living costs. She argued that gradual rate moves would give households, firms and market participants time to adapt. The November CPI report is scheduled for Dec. 10 at 8:30 a.m. ET. FOMC members are due to meet again Dec. 8-9.
