Central Bank Research Association's Annual Meeting Highlights Policy Challenges and Rate Hike Expectations

President Lorie K. Logan expressed concern about whether inflation will return to target in a sustainable and timely way, stating that more-restrictive monetary policy will be needed. The economic outlook shows that both inflation and the labor market have been hotter than expected, with core PCE inflation at 4.7% and the unemployment rate at 3.5%. Logan believes that the current cycle of monetary tightening has already had a fair amount of time to see its effects, and the housing market may pose an upside risk to inflation. She emphasized the need for more-restrictive monetary policy to return inflation to target, despite the potential risks, and called for the FOMC to follow through on the signal sent in June for further rate increases.