Fed official urges rate hikes to combat persistent winter inflation

Federal Reserve Bank of Dallas President Lorie Logan called for at least two additional quarter-percentage-point interest rate hikes, warning that stubborn inflation could force policymakers to accelerate tightening this winter. Her hawkish outlook raises fresh concerns for stock investors, particularly as higher borrowing costs threaten technology valuations, housing affordability and corporate earnings.

Logan reaffirmed her support for another 50 basis points of tightening, which would lift the Fed's current benchmark rate from 3.75% to 4.00% and potentially to 4.25% to 4.50%. She argued that inflation remains too persistent to justify ending the tightening cycle, noting that September's personal consumption expenditures price index rose 3.6% annually while core PCE inflation stood at 3.1%.

Persistent price increases across services, including healthcare, childcare and dining, suggest broader inflationary pressures could prove difficult to reverse. Although Logan favors additional tightening, she suggested policymakers could pause after two more increases to evaluate economic conditions before the December 89 policy meeting.

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