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Fed's Logan says a rate hike may be needed to beat inflation
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Fed's Logan says a rate hike may be needed to beat inflation
Jun 3, 2026 1:32 PM

June 3 (Reuters) - Dallas Federal Reserve President Lorie Logan on Wednesday said signs of robust economic growth and corporate earnings "going gangbusters" are helping to make her worried that the Fed may need to raise interest rates this year to get inflation back down to its 2% target. 

The hawkish remarks come just two weeks before Kevin Warsh chairs his first Fed policymaking meeting amid rising inflation pressures and a growing sense among his new colleagues that those pressures may not abate unless the central bank does more to tamp them down. 

Financial conditions, Logan said on Wednesday, are accommodative as AI investment continues to boom and to fuel demand while not yet delivering the possibility of disinflation through productivity gains. Warsh for his part has embraced the idea that AI is a disinflationary force.

Consumer spending is strong, Logan said, despite higher energy prices weighing particularly heavily on lower-income households. 

"These conditions indicate that monetary policy is not restraining the economy," Logan said in remarks prepared for delivery in El Paso, Texas. 

Meanwhile inflation is on the increase, pushed up not just by last year's tariff increases and this year's oil price increase from the Iran war, but by other factors as well, she said. 

Looking at a range of measures of underlying inflation, she said, inflation appears to be trending toward the mid 2's rather than all the way back to the Fed's 2% goal. 

"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. 

Logan was one of three Fed policymakers at the Fed's last meeting who dissented, arguing that the Fed ought to signal that a rate hike, and not just a rate cut, could be the Fed's next step.

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