Logan Sees Need for Two More 25-Basis-Point Fed Rate Hikes
Key Facts
Dallas Federal Reserve President Lorie Logan said she believes the Federal Open Market Committee needs to raise interest rates at least twice more, by 25 basis points each time. Her remarks came in a speech in Houston on November 10, 2026, setting out a more hawkish policy path than the committee’s pause at its October meeting suggested. But she stressed that the timing and pace of the increases would depend on economic data and near-term financial conditions. “It may be possible to move at a faster pace this winter.” This assessment reflects Logan’s personal view and does not represent a formal committee decision or a commitment to a specific rate path.
Logan said the decision to pause rate increases at the October meeting did not change the direction of policy she considers necessary, and that she favors implementing two more increases and then pausing to assess economic and financial developments. “After implementing two more increases, it would make sense in my view to pause and examine economic and financial developments.” This view puts the two increases at the forefront of the path she is advocating, while leaving the subsequent decision open to what the data show. The Federal Open Market Committee is scheduled to hold its next meeting on December 8 and 9, a meeting associated with the Summary of Economic Projections. Members’ views in December will therefore come after a period in which they can review the latest indicators.
Logan pointed to inflation remaining above the committee’s 2% target for nearly six years, and said she expects it to stay above target unless some degree of monetary policy restraint is imposed. The personal consumption expenditures price index rose 3.6% in the 12 months ended in September, while the core index, which excludes food and energy, rose 3.1% over the same period. On a monthly basis, the consumer price index rose 0.4% in October after a 0.6% increase in September, while the index excluding food and energy rose 0.3% in October, the same pace recorded in the previous two months. These readings show that the monthly core index’s slowdown was not accompanied by a similar decline in the headline index in October. Logan said persistent pressures mean bringing inflation down to target remains unfinished work.
Logan said price pressures are not limited to energy and tariff-affected manufactured goods, but extend to core services. Core services prices excluding housing and transportation rose 3.2% year over year through September, a pace 0.8 percentage point above the level historically consistent with the inflation target. She also pointed to large increases over the year in energy products and energy-intensive services such as air travel, as well as continued price increases for tariff-affected manufactured goods. “But the pressures are broader than that.” She said crude oil had risen by about 50% net since the previous energy conference a year earlier, while wholesale diesel prices had doubled at one point before partially retreating. These observations support Logan’s argument that inflation has multiple sources and is not confined to a single component that could quickly ease.
On measures of underlying inflation, Logan said the New York Fed’s Multivariate Core Trend inflation index was 2.8% in September, compared with 2.3% for the Dallas Fed’s trimmed mean PCE inflation measure over the 12 months through September. She also presented economic activity data as evidence that demand continued to grow: real gross domestic product rose at an annual rate of 3.4% in the third quarter, and the Dallas Fed’s weekly economic index was consistent with growth of about 3% annually. Real business equipment investment rose 14% in the third quarter compared with a year earlier, with computers, peripherals and communications equipment accounting for more than 80% of the increase. In the labor market, Logan estimated that unemployment remained just below 4%, and that employers added more jobs than needed to absorb labor force growth. These indicators depict an economy that continues to expand alongside inflation above target.
Jobless claims data published on November 12 showed initial claims rising to 200,000 in the week ended November 7, from a revised 191,000 in the previous week, exceeding economists’ forecast of 195,000. But the four-week average remained at 195,250, unchanged, tempering the significance of the single-week increase. The Associated Press said claims had not exceeded 230,000 in any week during the year and had remained at or below 200,000 for nine consecutive weeks. The agency describes claims as historically low, with layoffs rare, so this reading alone is not enough to indicate labor market deterioration. The October producer price index is scheduled for release on November 13 at 08:30 a.m. Eastern time, as investors await the data ahead of the December meeting.
Logan addressed financial market volatility in the weeks before the October meeting, attributing it to news about the outlook for technology investment and geopolitical developments. She said gradual policy adjustments could help markets and the economy adapt to higher interest rates at a time when technology-related investment is expanding rapidly. This financial context adds another factor to the decision on the pace of rate increases, alongside inflation, economic activity and the labor market. While Logan said a faster pace this winter was possible, she tied the pace to what the data and near-term conditions show. The November 13 producer price reading will be among the next indicators before the committee’s December 8 and 9 meeting.