Dallas Fed President Logan says one month of easing inflation is not enough, urges further rate hikes

[Financial News, New York = Reporter Lee Byung-chul] Although U.S. consumer prices and producer prices for June slowed more than expected, Lorie K. Logan, president of the Federal Reserve Bank of Dallas, publicly raised the need for additional interest rate hikes, saying that "one month of good inflation data is not enough." Unlike recent Federal Reserve System (Fed) officials who have welcomed the easing in inflation while remaining cautious, Logan, who has a vote on this year's Federal Open Market Committee (FOMC), was the most direct in calling for higher rates.
In a speech prepared for an event in Houston on the 16th local time, Logan said that "for now, a modest further increase in the policy rate would provide a better balance for achieving the Fed's dual mandate of price stability and maximum employment." She added that "as inflation continues to run above target, the burden on U.S. households is also growing."
Her remarks were somewhat at odds with the inflation data released this week.
According to the U.S. Department of Labor, the Consumer Price Index (CPI) fell 0.4% in June from the previous month, marking the largest decline since April 2020, while the Producer Price Index (PPI) also fell 0.3%. A sharp drop in international oil prices and a slowdown in housing costs helped pull inflation lower.
Logan, however, focused on annual inflation rather than monthly figures.
She said, "One month of relief is not enough. Now we need to finish restoring price stability," and added, "Monetary policy should move like hockey, looking ahead to where the puck is going, not where it is. Inflation is still not showing a sustained move down toward 2%."
U.S. consumer prices are up 3.5% from a year earlier, while producer prices have risen 5.5%, still well above the Fed's 2% target.
Logan said that even with lower energy prices and easing tariff effects, several alternative indicators, including core inflation excluding housing costs, show that price pressures remain elevated.
She stressed that "if inflation does not fall to 2% on its own, additional policy tightening will be needed." She added, "If high inflation becomes entrenched, larger rate hikes will be required and the labor market will pay a greater cost. A small tightening now is better than a much larger one later."
She did not say whether she would support an actual rate hike at the FOMC meeting on July 28-29. According to the CME FedWatch Tool, the market currently sees only a 12.3% chance of a rate increase at the July meeting, and expects any further hike would more likely come in September or October.




pride@fnnews.com Reporter Lee Byung-chul Reporter