Dallas Fed President and Chief Executive Officer Laurie Logan attends a research conference at the Dallas Fed on Friday, October 31, 2025 in Dallas, Texas, USA.
Desiree Rios | Bloomberg | Getty Images
Dallas Fed President Laurie Logan argued Thursday that this week’s good inflation news is not enough, calling for “moderate” interest rate hikes to help the central bank win a battle it has been losing for the past five years.
Logan, who is this year’s voting member of the Federal Open Market Committee, which decides interest rates, argued that inflation remains a big problem for American households and requires action from policymakers. While other Fed officials have said they support raising rates if inflation indicators do not improve, Mr. Logan has been the most specific in calling for rate hikes.
“We currently believe that a modest increase in interest rates would better balance the outlook and the risks to the FOMC’s dual mandate objectives,” Logan said in prepared remarks for a speech in Houston. “Inflation that exceeds target each month is increasing the strain on Americans’ budgets.”
Earlier this week, the Bureau of Labor Statistics reported progress on this front. Consumer prices fell by 0.4% in June, the largest monthly decline since April 2020, while wholesale prices fell by 0.3%. Both metrics benefited from low oil prices, but several other key categories also softened, particularly housing-related costs.
Still, Logan said the Fed still has work to do to reach its 2% inflation target. Despite the monthly decline, consumer prices rose 3.5% year-on-year and wholesale costs rose 5.5%. Inflation has been above the central bank’s target since the beginning of 2021.
“One month’s relief is not enough. It’s time to finish the job of restoring price stability,” the prime minister said. “In monetary policy, just like in hockey, you have to skate where the puck is going. Unfortunately, inflation does not appear to be on track for a sustained recovery to 2%.”
Markets are already expecting the FOMC to raise the key overnight borrowing rate by a quarter of a percentage point before the end of the year, which could happen as early as September, but more likely in October, according to CME Group’s FedWatch.
When the committee next meets on July 28-29, traders are pricing in just a 12.3% chance of a rate hike.
Logan pointed to a number of widely cited metrics and alternatives such as core prices, which subtract home prices, to show that inflation is stuck at levels well above the Fed’s target, even as the effects of recent energy price declines and tariffs have waned.
“If inflation isn’t going to reach 2% on its own, then at least some policy restrictions are needed to get there,” he said. “If higher inflation takes hold, steeper rate hikes will be needed to bring inflation back on target, and the costs to the labor market will be greater. It’s better to have modest limits now than tougher ones later.”
Governor Logan did not say specifically whether he would push for a rate hike at this month’s meeting or by how much he thought rates should rise.
