Dallas Fed President Lorie Logan said Friday she favors at least two more quarter-point rate increases before a pause, as U.S. inflation remains above the Federal Reserve’s 2% goal.
The Bureau of Economic Analysis (BEA) reported Thursday, Oct. 29, that the personal consumption expenditures price index rose 3.6% in the 12 months through September. The index excluding food and energy increased 3.1%. The figures were released a day before Logan gave her remarks.
Logan described economic activity as holding up well, household spending as firm and business investment as strong. She viewed the labor market as broadly balanced, with some signs it may be tightening. She also said monetary policy cannot resolve structural problems such as employers’ uncertainty about future workforce needs.
She cited inflation’s pressure on household grocery and rent budgets, businesses’ investment and hiring plans, and public services financed by taxpayers. Logan said changes to the Fed’s target influence longer-term borrowing costs, including mortgage, auto and business debt. In her view, moving gradually can give borrowers and companies time to adjust and help avoid an unnecessarily sharp weakening of economic activity.
Logan judged that the current rate range remained at least half a percentage point short of a level she would consider mildly restrictive. “Skipping a meeting does not change the monetary policy destination,” she said. Her outlook calls for at least two further increases before a pause to review economic and financial developments; she did not specify when they should occur or whether they should be consecutive.
At its Oct. 27-28 meeting, the Federal Open Market Committee (FOMC) voted 10-2 to keep the federal funds target range at 3.75% to 4%. Logan said she voted to maintain the range. The Federal Reserve’s statement identified Fed Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack as the two members who preferred a quarter-point increase.
Logan’s rate path is her own assessment, and she said her views do not necessarily reflect those of her FOMC colleagues or the Federal Reserve System. The next FOMC meeting is scheduled for Dec. 8-9.
