Dallas Fed President Lorie Logan said the Federal Reserve should raise interest rates to combat elevated inflation-remarks suggesting she could be prepared to dissent against a decision to hold rates steady later this month.
Speaking in Houston Thursday, Logan said the June inflation figures released Tuesday showed progress toward cooler price increases, but weren't enough to reassure her that inflation is on a path back to the Fed's 2% goal.
"The June CPI data do suggest the possibility of a more hopeful scenario where inflation returns all the way to target," Logan said, according to a published text of her remarks. "Still, that path is tenuous."
The Fed has held rates steady this year at 3.5% to 3.75%, including at Chairman Kevin Warsh's first meeting as the central bank's new leader in mid-June. Over the past six months, the labor market has strengthened and, until June, price increases had accelerated.
"I currently believe modestly higher interest rates would better balance the outlook and risks," Logan said.
In congressional testimony this week, Warsh committed to reining in inflation but didn't discuss how the Fed will move at its upcoming meetings. The cooler-than-expected inflation numbers published this week, meanwhile, have bolstered the thinking of other Fed officials who prefer to wait for more data before raising interest rates for the first time in three years.
The June inflation report led traders to slash their bets on a potential July rate hike. The likelihood implied by pricing in interest-rate futures markets now stands at just 12%.
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