A top Federal Reserve official is sounding the alarm on inflation, and the latest jobs report may have just turned up the volume.
The U.S. economy added 172,000 jobs in May, bolstering the case for a rate hike that Dallas Federal Reserve President and CEO Lorie Logan first raised Wednesday in prepared remarks at the University of Texas at El Paso. The national unemployment rate held at 4.3 percent for the third consecutive month, according to the Bureau of Labor Statistics.
Logan is a voting member of the Federal Open Market Committee, the body that sets the Fed’s interest rate policy.
Lorie Logan
“I am increasingly concerned that higher interest rates could be necessary later this year to fully restore price stability and appropriately balance both sides of the Fed’s dual mandate,” Logan said.
Logan said inflation has run close to 4 percent over the past 12 months and appears to be trending toward the mid-2s rather than all the way back to the Fed’s 2 percent target, driven by tariff increases, oil price shocks from the Iran war and other factors.
She said economic conditions, including first-quarter S&P 500 corporate earnings growth of more than 25 percent and continued AI investment, suggest monetary policy is not doing enough to slow growth.
“These conditions indicate that monetary policy is not restraining the economy,” Logan said.
Leisure and hospitality led May hiring gains with 70,000 new jobs, followed by local government at 55,000 and healthcare at 35,000, according to the BLS report. Financial services shed 22,000 jobs.
Logan was one of three FOMC members who dissented at the Fed’s April meeting, arguing the central bank should signal that a rate increase was as likely as a cut. Her remarks and Friday’s jobs data come two weeks before new Fed Chair Kevin Warsh helms his first FOMC meeting.
