In her opening remarks at the University of Texas at El Paso, Dallas Fed President Lorie Logan emphasized the importance of local engagement in the Federal Reserve's mission. Logan highlighted the unique role of the El Paso branch, which provides a distinct perspective on trade, migration, and energy production. She stressed that deep regional roots strengthen the Fed's understanding of the economy and allow communities to hold the institution accountable.
Logan then delved into the economic and monetary policy outlook, expressing concerns about persistent inflation. She noted that inflation has been taking too long to return to the FOMC's 2% target, with core PCE inflation running close to 4% over the past 12 months. Logan attributed some of the excess inflation to temporary factors like tariffs and energy price increases, but also acknowledged that some inflationary pressures are more persistent.
To gauge overall inflation trends, Logan considered various metrics that strip out volatile categories or unusually large price swings. She explained that core PCE inflation, which excludes volatile food and energy prices, was 3.3% for the past year. The trimmed mean PCE inflation rate, which sets aside the most extreme price changes, has been lower than core inflation at 2.3% for the past year. However, Logan cautioned that the trimmed mean's reliability is currently compromised due to a change in the mix of price increases and decreases.
Logan also discussed the labor market, noting that it appears stable and broadly balanced with an unemployment rate hovering around 4.3%. She mentioned that employers are adding an average of about 50,000 jobs per month, which aligns with the slow growth rate of the labor force. Logan expressed concern that higher interest rates might be necessary later this year to fully restore price stability and balance the Fed's dual mandate.
In conclusion, Logan emphasized the importance of thorough analysis and debate in making monetary policy decisions. She valued her FOMC colleagues' perspectives and looked forward to discussing the economic outlook and policy response with them at upcoming meetings. Logan concluded by reiterating that her views are her own and do not necessarily reflect official positions of the Federal Reserve System.
