• Dallas Fed President Lorie Logan states inflation remains unacceptably high despite recent cooling.
  • The labor market is now described as "roughly balanced," signaling a shift from extreme tightness.
  • Persistent price pressures, particularly in core components, suggest the Fed will maintain its cautious stance.

Dallas Federal Reserve President Lorie Logan emphasized that inflation remains too high for comfort, even as she noted the U.S. labor market has moved into better balance, according to remarks prepared for a business audience on Thursday.

The comments come amid fresh data showing U.S. inflation running at a 3% annual rate as of September 2025, up from 2.9% in August and marking the highest reading since January. The increase was largely driven by rising energy costs, while core inflation—which excludes volatile food and energy components—held steady at 3%, remaining stubbornly above the Fed's 2% target.

"While we've seen welcome progress on the employment front, the inflation picture remains challenging," Logan said, according to people familiar with her remarks. "The data continue to show that price pressures are more persistent than we would like, particularly in core services."

The characterization of the labor market as "roughly balanced" represents a significant shift from just a year ago, when policymakers were grappling with extreme worker shortages and rapid wage growth. This normalization suggests fewer job openings relative to available workers and less upward pressure on wages, though specific unemployment data from the latest period wasn't immediately available.

Financial markets reacted cautiously to the comments, with Treasury yields edging higher amid renewed concerns that the Fed may need to maintain its restrictive policy stance for longer than anticipated. Fed officials have been careful to avoid signaling any imminent rate cuts while inflation remains above their target.

Efforts to combat inflation have hit a snag in recent months as energy price volatility and stubborn shelter costs have kept overall price growth elevated. The September inflation reading marked the third consecutive month where headline inflation has either held steady or accelerated, complicating the Fed's path forward.

"We're not out of the woods yet on inflation," Logan reportedly cautioned, emphasizing the need for continued vigilance. The Fed's preferred gauge of core inflation has now been stuck at or near 3% for several months, well above the central bank's comfort zone.

When reached for comment, a spokesperson for the Dallas Fed declined to elaborate beyond the prepared remarks, noting that Logan's assessment reflected the most recent economic data available to policymakers.

The Fed's next policy meeting in November is widely expected to maintain current interest rate levels, though traders will be watching closely for any signals about the timing of potential policy shifts. With the labor market showing signs of normalization but inflation proving sticky, the central bank faces a delicate balancing act in the months ahead.

Correction: An earlier version of this article misstated the timing of the most recent inflation data. The 3% figure reflects September 2025 data, not August.