The Federal Reserve held interest rates steady this week by a 10-2 vote, but at least some officials are signaling the tightening cycle is not over. Dallas Fed President Lorie Logan said Friday the Fed needs at least two more quarter-point rate hikes, calling it “unacceptable” that inflation is not falling back toward the Fed’s 2% target.
Logan, a 2026 FOMC voting member, made the remarks at Davidson College. She said skipping a meeting “doesn’t change policy destination” and that after 50 basis points of hikes, “a pause would make sense” to assess what further action is appropriate.
Federal Reserve headquarters (Credits: MarketWatch)
Why Logan wants more hikes
Logan argued the current 3.75%–4.00% target range is not enough to get inflation back to 2%. She said the end goal is to make policy “modestly restrictive,” and that adjusting rates gradually reduces the risk of a sharp economic deterioration. Growth and consumer spending remain strong, the labor market may be tightening, and financial conditions are still providing a tailwind to the economy, she said.
She also noted that higher long-term yields — the 10-year Treasury briefly touched a 24-year high this week before retreating toward 5.24% — may reflect investors’ belief that monetary policy has more work to do. Those yields could slow the economy on their own, which she said could reduce how much additional tightening is needed.
The split inside the Fed
Logan’s hawkish stance contrasts with other senior officials. New York Fed President John Williams and Fed Vice Chair Philip Jefferson have both indicated there is no need for an immediate rate increase, preferring more time to evaluate incoming data.
Logan voted in favor of this week’s hold, but her message is clear: in her view, a pause is a comma, not a period. The question for markets now is whether enough of her colleagues agree that at least another 50 basis points of tightening is on the way.
Also Read: Did the Fed Make a Mistake Pausing Rates in October? The Treasury Could Help Save the Day
Source: MarketWatch — read the full story there.