Key facts
- Logan said in prepared remarks that the FOMC needs at least two more 25-basis-point increases.
- Logan said the pace could depend on the near-term economic and financial environment.
- Logan said it may be possible to move more rapidly this winter than the FOMC has moved so far this fall.
- The Fed raised rates by a quarter of a percentage point in September and skipped a hike in October.
- Logan said tighter policy is necessary to balance the outlook and risks for inflation and employment.
Dallas Federal Reserve President Lorie Logan said the Federal Open Market Committee needs to implement at least two more 25-basis-point rate increases to bring down inflation, and that it may need to do so more quickly than it has so far this fall to stop broadening price pressures from becoming embedded in the economy.
"It remains clear to me, given the current outlook, that the FOMC needs to implement at least two more 25-basis-point rate increases," Logan said in remarks prepared for delivery to an energy conference sponsored by the Dallas and Kansas City Fed banks. "Excess inflation is unacceptable." She added that "the exact pace of increases could depend on the near-term economic and financial environment" and that "it may be possible to move more rapidly this winter than the FOMC has moved so far this fall."
Consumer prices, even excluding volatile food and energy items, rose 0.3% in October, a pace that, if sustained, would translate to year-over-year inflation of more than 4%, according to the report. The Fed has a 2% inflation target, as measured by the Personal Consumption Expenditures Price Index. The Fed raised rates by a quarter of a percentage point in September but skipped a hike in October, a move Logan supported because she felt households, businesses and markets could adapt more easily to gradual rate hikes, which also reduce the risk of slowing economic activity more than necessary.
Logan said inflation is rising not just because of wartime energy disruptions or tariffs, but also because of broader trends that could persist even after recent shocks dissipate. "Tighter policy will be necessary to appropriately balance the outlook and risks for inflation and employment," she said. "And it is important to achieve that balance promptly. The longer above-target inflation persists, the greater the risk that it becomes baked into behavior." The Fed's next policy meeting is scheduled for December 8-9.