• Dallas Fed President Lorie Logan states inflation is running above the 2% target and trending higher.
  • The annual inflation rate reached 2.9% in August 2025, its highest level since January.
  • Persistent price pressures, particularly in food, energy, and vehicle costs, are driving the upward trend.

Federal Reserve official Lorie Logan delivered a sobering assessment of the inflation landscape, stating that U.S. inflation is not only running above the central bank's 2% target but is actively trending higher. The comments, made during a banking conference on Thursday, reflect growing concern among policymakers about persistent price pressures that have proven more stubborn than anticipated.

The latest data appears to support Logan's cautious stance. The annual inflation rate climbed to 2.9% in August 2025, marking its highest reading since January and continuing an upward trajectory that has complicated the Fed's path toward price stability. Core inflation, which excludes the volatile food and energy categories, remains elevated at 3.1%, according to people familiar with the matter.

"We're seeing broad-based pressures," Logan noted, pointing specifically to rising costs for food, energy, and vehicles as significant contributors to the recent uptick. The remarks suggest the Federal Reserve may need to maintain its restrictive policy stance for longer than markets had hoped, potentially delaying any near-term interest rate cuts.

The Fed's most recent economic projections in September placed core PCE inflation at a median of 3.1% for 2025, well above the stated 2% goal. Officials now expect only a gradual decline to 2.6% in 2026 and 2.1% in 2027, indicating a prolonged return to target that could test the patience of both markets and consumers.

Energy prices, particularly natural gas, have surged in recent months, while earlier deflationary trends in gasoline and fuel oil have moderated significantly. The persistence of these cost pressures across multiple categories suggests inflation may be becoming more entrenched in the economy.

Market reaction to the comments was muted initially, though Treasury yields edged higher in afternoon trading as investors recalibrated expectations for the timing of potential rate cuts. A spokesperson for the Federal Reserve did not immediately respond to a request for additional comment on Logan's remarks.

Efforts to combat inflation have hit a snag in recent months as the economy continues to demonstrate surprising resilience. Without clearer signs of moderating price pressures, the Fed would be forced to maintain its current restrictive stance, potentially weighing on economic growth through 2025.

Correction: An earlier version of this article misstated the timeline for core inflation projections. The Fed's September projections anticipate core PCE inflation declining to 2.6% in 2026, not 2025.