Fed's Logan: More Rate Hikes Needed for Inflation Fight

Dallas Fed President Lorie Logan has indicated that further interest rate increases are necessary to combat inflation. She believes the US central bank needs to raise short-term borrowing costs by at least another half of a percentage point to achieve a "modestly restrictive" monetary policy. This action is crucial for guiding inflation back towards the Federal Reserve's 2% objective.

Logan suggested that the current policy rate range of 3.75%-4.00%, following a quarter-point increase, is an important initial step. However, she estimates that an additional 50 basis points or more are required to properly balance the outlook and risks for the Fed's dual mandate goals. She emphasized the imperative to restore price stability.

Despite falling inflation as transitory factors recede, Logan noted that the economy is strengthening, and the labor market remains well-balanced. She cautioned that inflation is unlikely to decrease much further than 2.5% without these additional rate hikes. Logan also pointed out that undoing previous risk management cuts made by the FOMC last fall might be necessary.