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HOUSTON – Dallas Federal Reserve President Lorie Logan said Tuesday that interest-rate increases could proceed faster this winter after October’s consumer inflation report came in higher than she expected, adding a new warning about the pace of tightening to her existing call for at least two more quarter-point hikes.
In remarks at a Houston energy conference, Logan said the October Consumer Price Index raised concern that the Fed’s preferred inflation measure could also move higher when those data arrive.
“The Consumer Price Index for October came out this morning. It was higher than expected. I am concerned that PCE inflation could rise when we receive those data for October in a couple of weeks,” she said.
The PCE price index measures personal consumption expenditures. Logan noted that overall PCE inflation was 3.6% over the year through September, while core PCE inflation, excluding food and energy, was 3.1%. The Fed targets 2% inflation as measured by the overall PCE index.
Logan reiterated that the Federal Open Market Committee needs at least two more 25-basis-point increases, followed by a possible pause to assess economic and financial conditions. That two-hike position is not new: she made it in October 30 remarks, which JBizNews covered at the time.
Tuesday’s remarks added a more explicit possibility of a faster winter pace.
“The exact pace of increases could depend on the near-term economic and financial environment. It may be possible to move more rapidly this winter than the FOMC has moved so far this fall,” Logan said.
Her comments describe her own policy view, not an FOMC decision. They do not announce a December half-point increase or commit the committee to a particular timetable.
Logan estimated that the federal funds target range is at least 50 basis points, or half a percentage point, below the level needed to create modest restraint and begin bringing the inflation trend back toward target. That is her assessment of the gap in policy restraint, not the size of an announced next move.
She argued that price pressures extend beyond energy and tariff-sensitive goods into services such as healthcare, childcare, dining and hotels. She described economic growth as strong and the labor market as near maximum employment, saying accommodative policy is adding to inflationary pressure.
The FOMC raised its target range by a quarter point in September and held it steady in October. Logan said financial-market volatility had supported a more gradual approach, but skipping one meeting did not change her view of the destination.
After two more increases, she said, a pause could allow officials to examine developments and decide whether further action is needed. She also said she would change her policy views if the outlook and risks changed.
The speech was delivered at the Dallas and Kansas City Feds’ joint energy conference at the Dallas Fed’s Houston branch. It was scheduled as the morning keynote, not a midday announcement.
JBizNews Desk | Economy & Markets
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