Dallas Federal Reserve Bank President Lorie Logan said the Fed must continue raising interest rates to fully suppress inflation, while also noting that rising Treasury yields could help slow the economy.

"I currently estimate that the target range for the policy rate will need to be raised by another 50 basis points or more to properly balance the outlook and risks associated with our dual mandate objectives," Logan said Thursday in prepared remarks for an event hosted by the Dallas Fed.

Before becoming Dallas Fed president, Logan spent more than two decades in the markets group at the New York Fed. She also noted that U.S. Treasury yields have continued to climb over the past several weeks. She said market participants told her the initial rise in yields stemmed from expectations of strong economic growth and a higher neutral rate for the Fed, but models now show that the term premium — the extra return investors demand for holding long-term bonds instead of short-term ones — is also rising.

Lorie Logan, President and CEO of the Dallas Federal Reserve Bank. "A higher term premium can slow the economy, thereby reducing the need for monetary policy tightening," said Logan, who is a voting member of the Federal Open Market Committee, the Fed's rate-setting body, this year. With the disinflation process stalling, policymakers hiked rates by 25 basis points at their September meeting, the first increase in three years. The median projection of officials at that meeting indicated at least one more hike this year.

Bonds have sold off this year, with the 30-year Treasury yield up 64 basis points, or 0.64 percentage points, since June. Some of Logan's colleagues said this week that the Fed can afford to be patient and wait for the right moment to implement its next rate hike. Fed Vice Chair Philip Jefferson and New York Fed President John Williams — who along with Chair Kevin Warsh are sometimes referred to as the Fed's Big Three — said the Fed can wait and observe data over the coming weeks before making a policy decision.

Those remarks lowered market expectations for a Fed rate hike at the October 27-28 meeting. Based on federal funds rate futures pricing, investors now see only a 28% chance of a hike next month, down from 70% earlier this week. After this month, the Fed's next meeting is in December. Logan detailed in a 2023 speech the various Treasury market models she references. She said she will continue to watch yield movements and other aspects of the economy to judge what level of interest rates would provide a certain degree of restraint on the economy.

Logan said: "At a minimum, several more increases to the target range will be needed to offset the rate cuts the FOMC made last fall out of risk considerations." She was referring to the Fed's cumulative 75 basis points of rate cuts last year. "But the ultimate goal should be to keep monetary policy moderately restrictive so that the economy moves onto a path that simultaneously sustains full employment and price stability."