Dallas Fed President Lorie Logan called for at least two additional 25bps interest rate hikes, warning that policymakers may need to accelerate tightening this winter to prevent persistent inflation from becoming entrenched. Speaking at an energy conference on Tuesday, Logan said, “It remains clear to me, given the current outlook, that the FOMC needs to implement at least two more 25-basis-point rate increases.” While she previously supported a gradual approach to allow the economy to adjust, Logan acknowledged that “It may be possible to move more rapidly this winter than the FOMC has moved so far this fall.” She emphasized the urgency of restoring price stability, warning, “The longer above-target inflation persists, the greater the risk that it becomes baked into behavior.”
Other Fed officials echoed concerns about persistent price pressures. Kansas City Fed President Jeff Schmid argued that monetary policy was not yet sufficiently restrictive, describing the current interest rate environment as “fairly accommodative.” He said, “I didn’t think our rate was restrictive last year, and I believe today it’s fairly accommodative,” suggesting that further tightening would be necessary to contain inflation. Meanwhile, Chicago Fed President Austan Goolsbee expressed particular concern about October’s CPI report, which showed core inflation holding at 0.3% mom for a third consecutive month, above expectations of 0.2%. “It’s another distressing report, borderline disturbing,” Goolsbee said, adding, “We’ve been hoping to get progress.” Their remarks reinforced concerns that inflation pressures are proving more persistent than anticipated, extending beyond the immediate effects of energy disruptions and tariffs.
Philadelphia Fed President Anna Paulson also supported additional tightening but emphasized a more measured pace of rate increases. She said, “A further gradual tightening seems appropriate,” arguing that smaller adjustments would give households and businesses time to adapt while allowing policymakers to assess the effects of previous decisions. Nevertheless, Paulson acknowledged that October’s CPI report “suggests inflation pressures are still very much with us.” She also identified conditions that could justify faster action, stating, “I would want to act more quickly if inflation expectations drift up, if wage pressures build, or if underlying inflation moves higher.” Her position therefore reflects support for continued tightening, with the pace remaining dependent on incoming evidence rather than a predetermined timetable.
Taken together, the comments point to growing agreement among these Fed officials that further tightening is needed, with the principal debate shifting toward its speed. Logan favors at least 50bps of additional cumulative increases and is open to accelerating the pace, while Paulson prefers gradual adjustments unless inflation risks intensify. Schmid’s assessment that policy remains accommodative reinforces the case for higher rates, while Goolsbee’s reaction highlights frustration with the lack of disinflation progress. Their remarks also follow Fed Governor Christopher Waller’s warning that a 50bps December hike should be considered if core CPI remained around 0.3% mom or higher, a threshold subsequently met by October’s reading. However, support for further tightening does not yet establish a consensus on larger individual rate increases, leaving the December decision dependent on how policymakers assess the persistence and risks of inflation.
Key Takeaways
- Dallas Fed President Lorie Logan called for at least two more 25bps rate hikes, warning that faster tightening this winter may be necessary to prevent persistent inflation from becoming entrenched.
- Fed officials share concerns about stubborn inflation but differ on the pace of tightening. Kansas City Fed President Jeff Schmid considers policy fairly accommodative, while Philadelphia Fed President Anna Paulson favors gradual increases unless inflation risks intensify.
- Chicago Fed President Austan Goolsbee described October CPI as “borderline disturbing,” reinforcing concerns about stalled disinflation. However, calls for faster tightening do not yet establish an FOMC consensus on larger individual hikes.
