Dallas Fed’s Logan Says Policy Must Stay Restrictive Amid Inflation Risks

Dallas Federal Reserve President Lorie Logan said her “base case” is for U.S. monetary policy to remain “modestly restrictive for some time” to ensure inflation continues to fall toward the Federal Reserve’s 2% goal. Logan pointed to June consumer-price figures that suggest the Fed’s preferred gauge—core PCE inflation—will edge higher and remain above target. She noted the labor market is still strong and that upcoming fiscal measures are likely to buttress growth, allowing the economy to withstand higher borrowing costs for now. The policymaker cautioned that lowering rates too early risks leaving inflation elevated for longer, potentially causing deeper economic damage and lengthening the path back to price stability. At the same time, waiting too long to ease could require more aggressive cuts later if employment weakens. Logan also flagged the recently implemented 145% tariff on Chinese imports as a source of sustained price pressure that could complicate the Fed’s task. Even so, she said a combination of softer inflation and a cooling labor market could justify rate reductions “fairly soon.”