March 4, 2024

Lorie K. Logan, newly appointed President and CEO of the Federal Reserve Bank of Dallas, is among the members of this undated handout image obtained May 11, 2022.

Dallas Fed | via Reuters

Dallas Fed President Lori Logan said on Thursday that current economic data does not justify the central bank not raising interest rates at its next meeting in June.

While noting some progress in reducing inflation and cooling the labor market, Logan said the Fed still has work to do in achieving its price stability goals. Logan is a voting member of the rate-setting Federal Open Market Committee this year.

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“After raising the target range for the federal funds rate at each of the past 10 FOMC meetings, we’ve made some progress,” she said in prepared remarks for a speech to bankers in San Antonio. “Data in the coming weeks may still indicate that it is appropriate not to attend. However, as of today, we have not done so.”

Market pricing suggests the Fed is expected to remain on hold at its June 13-14 meeting, pausing the rate hike cycle that began on March 22. CME Group’s FedWatch IndicatorsA gauge of prices in the fed funds futures market sees a 26 percent chance of a quarter-point hike at the meeting, although that probability has been rising in recent days.

Like other Fed officials who have spoken recently, Logan emphasized that the decision will ultimately be based on inflation and employment data that remain unreleased before the next meeting.

In other speeches on Thursday, Fed Governor Philip Jefferson also said inflation was too high, but he was watching the impact of rate hikes on the economy before deciding on future actions.

“History has shown that monetary policy lags are long and variable and that a year is not long enough for demand to feel the full impact of higher rates,” Jefferson said in remarks prepared for a speech in Washington, D.C.

But Logan expressed concern that what she’s seen so far suggests the Fed’s rate hikes have had little impact, totaling 5 percentage points.

“We haven’t made the progress we need to make. We’re a long way from now to 2 percent inflation,” Logan said, referring to the Fed’s longer-term goal.

She noted that the Fed’s preferred inflation data point, the core personal consumption expenditures price index, rose at an annualized rate of 4.9% in the first quarter. This is higher than the 4.4% growth rate in the fourth quarter of 2022.