EL PASO, Texas (Reuters) - Dallas Federal Reserve Bank President Lorie Logan on Thursday said she believes inflation is still heading to the Fed's 2% target, although she can imagine "other paths" that the Fed ought to be prepared for.
"I think there's good reasons to think that we're headed to 2% -- we're still on that path, perhaps a bit slower and a little bit bumpier than maybe many thought at the beginning of the year," Logan said at an event in El Paso, Texas. "But there's a lot of uncertainty about that path. And I can imagine other paths that we need to be prepared for. And I continue to be concerned with upside risks around inflation."
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Two prominent economists, who both were on short lists to run the Federal Reserve, on Tuesday rejected the benign view that inflation would continue to gradually decline to the Federal Reserve’s 2% inflation target without causing the economy pain.
“I do think inflation at the moment is stuck well above the Fed’s 2% target. We’re not at a good level,” said Glenn Hubbard, a top economic adviser to President George W. Bush.
Economists who blame a measurement issue with shelter costs for the high inflation are overstating the case, Hubbard said. Even if shelter costs were lower, they would not fall enough to reach 2%, he argued. That’s because, at the current level of shelter inflation, all other prices would have to be zero to reach the 2% target, he said.
Larry Summers, a top economic adviser to President Barack Obama, agreed about the troublesome inflation picture.
“I don’t think we’re on a convincing trajectory to the 2% inflation target,” Summers said.