Dallas Fed President Lorie Logan Advocates Modestly Higher Interest Rates

Lorie Logan, President and CEO of the Federal Reserve Bank of Dallas, speaking at a research conference hosted by the Dallas Fed in Dallas, Texas, on Friday, October 31, 2025.

Photo: Desiree Rios / Bloomberg via Getty Images

Dallas Federal Reserve President Lorie Logan argued that the recent positive inflation data were insufficient and urged a modest increase in interest rates on Thursday to address the five‑year battle the central bank has been waging.

As a voting member of the Federal Open Market Committee this year, Logan emphasized that inflation remains a significant concern for U.S. households, requiring policy action. While other officials prefer higher rates only if inflation metrics improve, Logan’s stance is the most definitive call for a rate hike.

“I believe that moderately higher interest rates would better balance the outlook and risks for the FOMC’s dual‑mandate objectives,” Logan said in prepared remarks for a speech in Houston. “Each month of inflation above target intensifies the pressure on American households’ budgets.”

Earlier this week, the Bureau of Labor Statistics reported progress: consumer prices fell 0.4% in June — the largest monthly decline since April 2020 — and wholesale prices slipped 0.3%. Both measures benefited from declining oil prices, while costs in other key categories, especially housing, also softened.

Nevertheless, Logan cautioned that further progress is needed for the Fed to achieve its 2% inflation target. Despite the monthly decline, consumer prices remain 3.5% higher than a year earlier, and wholesale prices are up 5.5%. Inflation has exceeded the central bank’s goal since early 2021.

“A single month of relief is insufficient; it is time to complete the task of restoring price stability,” she said. “In monetary policy, as in hockey, you must follow the puck. Unfortunately, inflation does not appear to be on a sustainable path back to 2%.”

Market participants anticipate that the FOMC will raise its key overnight rate by a quarter percentage point later this year — potentially as early as September, though more likely in October — according to the CME Group’s FedWatch tracker based on fed funds futures.

The committee’s next meeting is scheduled for July 28‑29, with traders assigning a 12.3% probability to a rate hike.

Logan referenced several widely used indicators, as well as alternative measures such as core prices excluding housing, to illustrate that inflation remains well above the Fed’s target even after recent declines in energy prices and waning tariff effects.

“If inflation does not return to 2% on its own, then some degree of policy restraint is required to achieve that goal,” she said. “Should higher inflation become entrenched, sharper rate increases would be needed, imposing a greater cost on the labor market. Implementing modest restraint now is preferable to severe restriction later.”

Logan did not specify whether she would advocate a rate increase at the current meeting or indicate the magnitude of any potential hike.

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