Dallas Federal Reserve President Lorie Logan said on Wednesday that robust economic expansion and corporate earnings that are "going gangbusters" have increased her concern that the central bank may need to raise interest rates later this year to bring inflation back to its 2% objective.
Logan delivered the comments in remarks prepared for delivery in El Paso, Texas, noting that they come roughly two weeks before Kevin Warsh is set to chair his first Federal Open Market Committee meeting amid a buildup of inflationary pressures and a growing view among some of his colleagues that additional action may be necessary to contain those pressures.
Financial conditions, Logan said, remain accommodative. She pointed to a sustained boom in AI investment as a driver of demand that so far has not translated into disinflation through productivity gains. By contrast, Warsh has publicly embraced the view that artificial intelligence can be a disinflationary force.
On the consumption side, Logan said household spending is holding up, even as higher energy prices are exerting a disproportionate burden on lower-income families. "These conditions indicate that monetary policy is not restraining the economy," she said.
Logan also described inflation as moving higher and attributed the increase to multiple contributors. In her remarks she singled out last year’s tariff increases and a rise in oil prices this year related to the Iran war, while saying there are other factors at play beyond those two.
Reviewing a range of measures of underlying inflation, Logan said the trend appears to be toward the mid 2% range rather than back to the Fed’s 2% target.
"I am increasingly concerned that higher interest rates could be necessary later this year to fully restore price stability and appropriately balance both sides of the Fed’s dual mandate," Logan said.
At the Fed’s last policy meeting, Logan was one of three officials who dissented. Those dissenters argued the central bank should signal that an increase in rates - and not only the prospect of cuts - could be the next move.
This set of remarks underscores the tension within the Fed between officials cautious about acting too aggressively and those signaling readiness to raise the policy rate if inflation does not re-center on target. Logan’s comments emphasize the role of persistent demand, sectoral pressures such as energy costs, and the uncertain short-term inflationary impact of rapid technology-driven investment.