The president of the Dallas Fed warns that a rate hike may be necessary this year

A top Federal Reserve official is sounding the alarm on inflation, and the latest jobs report may have turned the volume up even higher.

The U.S. economy added 172,000 jobs in May, strengthening the case for a rate hike that Dallas Federal Reserve President and CEO Lorie Logan first made Wednesday. prepared remarks at the University of Texas at El Paso. The national unemployment rate remained at 4.3 percent for the third month in a row. 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.

“I am increasingly concerned that higher interest rates may be necessary later this year to fully restore price stability and appropriately balance both sides of the Fed’s dual rate. mandate,” Logan said.

Logan said inflation has been near 4 percent for the past 12 months and appears to be moving toward the mid-20s rather than all the way back to the Fed’s 2 percent target, driven by rate hikes, 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, indicate that monetary policy is not doing enough to slow growth.

“These conditions indicate that monetary policy is not keeping the economy in check,” Logan said.

Leisure and hospitality led to an employment increase in May with 70,000 new jobs, followed by local government with 55,000 and health care with 35,000, according to the BLS report. The financial services sector has cut 22,000 jobs.

Logan was one of them three FOMC members who disagreed at the Fed’s April meeting, arguing that the central bank should signal that a rate hike was as likely as a cut. Her comments and Friday’s jobs data come two weeks before new Fed Chairman Kevin Warsh leads his first FOMC meeting.

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