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MNI: Fed's Logan Signals Support For June Rate Hike


Federal Reserve Bank of Dallas President Lorie Logan Thursday signaled support for an eleventh straight Fed rate hike in June amid sticky core inflation and still-high wages.

"The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet," she said in prepared remarks.

Core PCE inflation was 4.9% annualized for the first quarter of 2023. "That is higher than overall inflation over the past year, higher than core inflation in the previous quarter and much higher than the inflation rate the public is counting on us to deliver," she said. "We haven’t yet made the progress we need to make. And it’s a long way from here to 2% inflation."

"The economy is not nearly as far out of balance as when the FOMC began raising rates 14 months ago. But the question for monetary policy is not whether there has been some progress," she said. "It’s whether inflation is on track to return all the way to our 2% target and to do so in a sustainable and timely way."

"As of today, though, I remain concerned about whether inflation is falling fast enough," she said, adding that the labor market's strength appears to be contributing to high inflation and there are hints that wages might be leveling off at a relatively high pace.

Federal Reserve officials have sounded divergent notes about the central bank’s next policy move, with some inclined for a pause and some remaining open for additional hikes. (See: MNI INTERVIEW: Fed's Barkin 'Very Open' To More Tightening)

If the FOMC doesn’t stay committed to restoring price stability, the public could come to expect persistently high inflation, she said.

Logan also used her speech to the Texas Bankers Association to address discount window stigma. She said periodic borrowing by every bank would make it even more clear that borrowing is not in any way a negative signal.

"Legal documents and collateral arrangements for the discount window should be in place well before any funding need arises," she said. "Looking forward, the Federal Reserve should also consider expanding the hours of operation for critical services like the discount window. Our liquidity backstop should be available whenever banks might need it."

MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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