Key facts
- Dallas Fed President Lorie Logan believes current monetary policy is neutral or a bit loose.
- Logan stated that mildly restrictive policy is needed to bring inflation down to the Fed's 2% target.
- She indicated that inflation is currently trending towards 2.5%.
- Logan was one of three dissenters at the Fed's last meeting, arguing a rate hike should remain an option.
- She cited accommodative financial conditions, strong consumer spending, and booming corporate earnings as indicators of policy not restraining the economy.
Dallas Fed President Lorie Logan expressed that current monetary policy is perceived as 'neutral or perhaps even a bit loose,' which she believes is not aligned with the economy's needs given persistent inflation. She stated that inflation is currently trending towards 2.5%, while the Federal Reserve's objective is to reduce it to 2%. To achieve this, Logan indicated that 'at least mildly restrictive policy' is necessary to 'finish the job,' suggesting the possibility of further interest rate hikes later this year. Logan highlighted that accommodative financial conditions, strong consumer spending, and booming corporate earnings suggest policy is not sufficiently restraining economic activity. She also noted that drivers such as last year's tariff increases and higher oil prices from the Iran war are pushing inflation towards the mid-2% range, indicating the disinflationary impulse from the post-pandemic period may have run its course. Logan was one of three dissenters at the Fed's last meeting, arguing that a rate hike should remain a possibility. These remarks come ahead of Kevin Warsh's first Federal Open Market Committee meeting as chair.