Story perspectives

Fed's Logan warns of higher rates as inflation nears target

6/4/2026

Summary

Logan Warns Hikes

President Logan warned higher rates may be needed this year to hit the 2% inflation target.
She noted inflation is edging toward the mid-2% range due to tariffs and oil prices from the Iran war.
Logan, one of three dissenters at the last Federal Reserve (Fed) meeting, kept the rate-hike option open, raising the risk premium ahead of Governor Kevin Warsh’s first FOMC meeting.

Summary

Fed Highlights Stability

The Federal Reserve’s Beige Book said employment stayed stable while manufacturing hiring rose in districts due to data-center demand.
Most districts reported Middle East-driven energy costs lifted shipping, packaging, grocery and fertilizer prices, squeezing farm margins as conditions fell.
CME FedWatch gave a 40.9% chance the rate stays at 3.5%-3.75% and a 41.7% chance of a 25-bp hike.
The Fed’s inflation gauge rose 3.8% in April, the strongest since 2023.

Summary

Trump Predicts Cuts

President Donald Trump said a neutral funds rate is about 1.0% and expects Fed chair Kevin Warsh to cut rates despite rising inflation.
Former Lehman Brothers economist Stephen Slifer warned the Federal Reserve’s credibility is at risk after a 2020 policy error and inflation above its 2 % target.
Market participants expect a 0.25 % rate hike by year-end and say the 10-year Treasury yield could rise to or above 5.0 % without tightening bias.

Summary

Hammack Dissent

Federal Reserve (Fed) President Beth Hammack dissented at the April 28-29 meeting because the statement hinted at a cut, warning that inflation expectations could force policy adjustments at cost if pressures persist.
She identified electricity, health-insurance premiums and software as drivers and said a Strait of Hormuz would take months for flow to recover.
She noted that despite high inflation the economy stays resilient with near-full-employment labor market and financial conditions.

History

Historical Context

After Paul Volcker became Fed chairman in August 1979, he raised the federal-funds rate to a June 1981 peak of about 20 % and drove inflation from a 14.8 % high in 1980 to under 3 % by 1983. Decades later, the Federal Reserve again faces 25-basis-point hike debates, with 2025-26 meetings holding the target near 3.5-4 % as policymakers seek to curb renewed price pressures.

1 of 5

Logan Warns Hikes

President Logan warned higher rates may be needed this year to hit the 2% inflation target.
She noted inflation is edging toward the mid-2% range due to tariffs and oil prices from the Iran war.
Logan, one of three dissenters at the last Federal Reserve (Fed) meeting, kept the rate-hike option open, raising the risk premium ahead of Governor Kevin Warsh’s first FOMC meeting.

1 / 5