Logan makes the case for two more increases
Speaking at Davidson College in North Carolina on Friday, Dallas Federal Reserve Bank President and CEO Lorie Logan said the central bank needs at least two additional quarter-percentage-point rate increases to deal with inflation running above target. The Fed's preferred gauge showed inflation at 3.6% in September. Logan described it as unacceptable that inflation has stayed above the 2% goal for close to six years.[S1][S2][S3][S4][S5][S6][S7]
Logan spelled out the costs of persistent inflation, saying rising prices strain parents buying food for their children and young adults paying rent for the first time. She added that unpredictable input costs complicate corporate investment and hiring decisions, and that inflation weighs on taxpayers who fund public services, schools and national defense. Restoring price stability, she argued, is the priority.[S1]
Why Logan backs the October hold
Logan supported the Federal Open Market Committee's choice to leave rates unchanged at its October meeting, pointing to geopolitical uncertainty and turbulence in technology investment. She reasoned that moving policy in smaller steps in such conditions gives households, businesses and markets room to adjust to higher rates and lowers the danger of an unnecessarily sharp slowdown in activity.[S1]
She also contended that the exact date of each increase matters little for the longer-term rates most borrowers actually pay, provided markets grasp the committee's plans. Skipping a meeting, in her view, does not alter where policy is headed, and clarifying that destination helps the economy adapt and capture the benefits of waiting.[S1]
A break with Warsh and Musalem's warning
By calling for several increases at upcoming meetings, Logan diverged from Fed Chair Kevin Warsh's approach of avoiding signals about future policy. At the October meeting, the dissents favoring a quarter-point hike came from Cleveland Fed President Beth Hammack and Fed governor Lisa Cook, who is due to appear at an unusual White House hearing in December over unproven mortgage fraud allegations.[S1]
In separate remarks Friday at a Shadow Open Market Committee gathering in New York, St. Louis Fed President Alberto Musalem said additional policy firming will be required, and soon. Musalem, currently a non-voting FOMC member who will gain a vote in 2028, argued that smaller moves made earlier tend to cause less disruption than larger abrupt ones, and that acting sooner in small steps while inflation expectations remain anchored is more likely to succeed without harming the labor market or growth.[S1][S8]
