Logan calls for at least two 25-basis-point rate hikes

Key Facts

Dallas Fed President Lorie Logan called for at least two additional interest-rate increases of 25 basis points each, followed by a pause to assess economic and financial developments. In remarks on October 30, she said she viewed those steps as necessary to tighten monetary policy. Logan had voted at that week’s meeting to keep the target range at 3.75% to 4%. Her position follows the Fed’s decision to leave rates unchanged on October 28, a move opposed by two members who preferred a quarter-point increase. The positions point to differences within the committee over the timing of tightening, while Logan’s stance on the increases remains her individual view.

Logan estimated that the current range is at least 50 basis points below the level that would moderately restrain activity and begin returning inflation to a path consistent with the target. She said “economic growth is strong” and “consumer spending is resilient,” while unemployment remained slightly above 4%. This assessment puts the focus on continued strength in activity despite the current interest-rate level. In its October 28 statement, the Fed said inflation remained elevated and that gathering more information would help the committee determine the appropriate policy stance to return inflation to its 2% target in a timely manner. The statement added that inflation was above target, without announcing a specific path for future decisions. This reflects the committee’s continued consideration of incoming data as part of its deliberations.

In a similar stance, St. Louis Fed President Alberto Musalem said “further monetary policy tightening will be necessary, and soon.” He said inflation was above the committee’s 2% target and that the risks were tilted toward it remaining above target. Musalem had said in earlier remarks on October 8 that elevated inflation was being driven by persistent demand pressures and negative supply shocks. He also said early, gradual action is usually less disruptive than larger moves made later. His call aligns with Logan’s view that further tightening is needed, while Logan focused on resilient spending and growth and Musalem explained the risks of inflation remaining above target. These remain remarks by two officials, while the committee makes decisions collectively.

September data from the Bureau of Economic Analysis showed the core personal consumption expenditures price index, excluding food and energy, rose 3.1% year over year and 0.3% month over month. The headline personal consumption expenditures price index rose 3.6% annually and 0.5% monthly. Personal consumption expenditures in current dollars also increased 0.5% during the month, while real spending was unchanged, according to the published monthly change table. The figures show inflation remaining above the committee’s target alongside no monthly growth in real spending. In its October decision, the Fed kept the target range unchanged, while Lisa Cook and Beth Hammack preferred a quarter-point increase. The Fed’s decision recorded rates at 4%, following the same level on September 16, according to EL7 data.

After the blackout period restricting Fed officials’ comments around committee meetings ended, public remarks resumed following the October meeting. A report quoted Fed Chair Kevin Warsh as saying he was encouraged by progress in reducing inflation, but acknowledged that price stability had not yet been achieved. In markets, the yield on two-year U.S. Treasury notes rose above 4.79% on October 28, from 4.70% late the previous day, after the two members’ objections to the hold became known. The yield later fell to 4.69% after Warsh’s remarks. The major U.S. indexes closed modestly higher that day, with the S&P 500 and Nasdaq each up 0.3%, while the Dow Jones added 97 points, or 0.2%. These moves do not signal a judgment on the next decision, which will depend on the committee’s assessment of the available information.

In market expectations, futures markets cut their bets on a December rate increase, while market participants continued to view an increase as more likely than a hold. This comes as Musalem called for a near-term increase, while Logan said she wanted at least two hikes before pausing to assess conditions. Among upcoming price data releases, the Bureau of Economic Analysis plans to publish its October personal income and spending report on November 25, 2026, at 8:30 a.m. Eastern time. The next Federal Open Market Committee meeting is scheduled for December 8 and 9, 2026. The Fed chair is scheduled to hold a news conference on December 9. Interest-rate decisions remain tied to the committee’s assessment of developments and the data available before the meeting.