Dallas Fed President Lorie Logan said overnight that she expects a slight pickup in the Fed’s preferred inflation measure following June’s CPI release and warned against easing policy prematurely. With the PCE inflation gauge at 2.3% in May, Logan said the latest CPI data “probably” means it will “move up a bit.” She stressed the need for a longer trend of subdued inflation before being confident in the disinflation process.
At the same time, Logan pointed to a solid labor market, near-record stock prices, and the recently passed Trump fiscal package as “tailwind” for continued economic strength.
Against that backdrop, Logan argued that the Fed can afford to “hold tight for a while longer,” maintaining modestly restrictive policy to ensure inflation returns to target sustainably.
