Dallas Fed's Logan Calls for 50 Basis Points or More in Additional Rate Hikes to Tame Inflation

Dallas Federal Reserve President Lorie Logan said the FOMC should raise interest rates by at least 50 basis points more, arguing the current policy stance has been "offside" and is not sufficiently restrictive to return inflation to the 2% target. Logan framed the move as requiring at minimum two additional 25-basis-point hikes, which she said would at least reverse the cuts made last autumn, though she acknowledged the ultimate rate level needed remains uncertain.

Logan noted that while inflation is falling, it is not on track to reach 2%, even as economic growth is strengthening and the labor market remains well balanced. She said policy needs to shift from its current non-restrictive setting to become modestly restrictive to finish the job on inflation.

Other Fed officials struck varying tones alongside Logan's remarks. Governor Lisa Cook flagged that supply shocks have had surprisingly persistent effects on prices, and Vice Chair Philip Jefferson said he remains concerned about energy prices leading to persistent inflation. Governor Michelle Bowman, however, signaled no urgency for further rate adjustment. Logan also noted that recent moves in the bond market could do some of the tightening work, a caveat to her otherwise hawkish call.