The Federal Reserve’s inflation fight may not be as finished as markets had hoped. Lorie Logan, president of the Dallas Federal Reserve, said on June 3 that inflation appears to have settled in the mid-2% range rather than converging toward the Fed’s 2% target, a distinction that sounds small but carries significant policy weight.
Logan’s remarks, delivered in El Paso, put a hawkish frame around a set of numbers that don’t exactly scream victory. Core PCE inflation sits at 3.3%. Non-housing services inflation is running at approximately 3.4%. The trimmed-mean PCE, a measure that strips out outliers, clocks in at 2.3%, though Logan cautioned that figure can be misleading about the broader trend.
Where the numbers actually stand
The current federal funds rate sits at 3.5% to 3.75%. Logan’s comments strongly imply that level of restriction may not be enough to push inflation the rest of the way down.
Non-housing services inflation is the category that tends to keep Fed officials up at night. It covers things like haircuts, restaurant meals, and healthcare, which make up a substantial share of what consumers actually spend money on. At roughly 3.4%, that slice of the economy is running nearly 70% above where the Fed wants it.
