Dallas Fed President Lorie Logan offers economic outlook

Delivered in January at The University of Texas at Austin McCombs School of Business, Dallas Fed President Lorie Logan said “the Federal Open Market Committee (FOMC) has been tightening monetary policy for the past year to bring inflation back to our 2% target. The FOMC is committed to reaching our goal of restoring price stability. But considering the uncertainties we face, I don’t find it particularly helpful at this time to lock in on a peak rate or the precise path rates will follow. Rather, we need to keep our eyes on the economic and financial outlook and lay out a strategy that is both flexible and robust so we are best positioned to achieve our goals however the outlook evolves.

Inflation over the past two years has been much too high. The FOMC aims for 2% annual inflation as measured by the price index for personal consumption expenditures, or PCE, but inflation has averaged 5.8% at an annual rate since January 2021.

This high rate of inflation weakens our economy. People’s incomes fall short of the cost of rent and groceries, and new research at the Dallas Fed finds that the rising cost of living is particularly stressful for lower-income households. Businesses can’t plan well when they don’t know what they’ll pay for materials or be able to charge their customers. And the longer high inflation continues, the greater the risk that prices and wages rise just because people think inflation will remain high — a spiral that would significantly increase the cost of bringing inflation down. In sum, price stability is foundational for a healthy economy and labor market over time.”

You can find Fed President Logan’s full speech on the Federal Reserve Bank of Dallas website.