Dallas Fed President Lorie Logan said on Thursday that the Federal Reserve needs to raise short-term borrowing costs by at least another 50 basis points to move monetary policy into "modestly restrictive" territory and steer inflation back toward the Fed's 2% target.

Speaking to business executives and community leaders in Texas at the regional Fed bank's headquarters, Logan said the Fed's 25 basis point rate increase last month, which brought the policy rate to a range of 3.75% to 4.00%, was an "important step" in tightening policy.

"Nevertheless, my current assessment is that the target range will need to be raised by another 50 basis points or more to properly balance the outlook and risks around our dual mandate goals," she said. "We must restore price stability."

She said the economy is strengthening and the labor market is in a good state of balance. While inflation is declining as temporary factors fade, it appears unlikely to fall far below 2.5% without further rate increases.

Logan said: "A few more increases in the target range would offset the rate cuts the Federal Open Market Committee (FOMC) implemented last fall for risk-management reasons." She was referring to the Fed's policy-setting FOMO CORP. (FOMC), which lowered the policy rate by a cumulative 75 basis points over its final three meetings last year.

Logan's remarks came as the benchmark 10-year U.S. Treasury yield briefly touched a 24-year high before retreating to around 5.24%. Logan said rising long-term bond yields indicate market participants expect strong economic growth and a higher Fed policy rate; however, they could also reflect a rise in the term premium, which "could weigh on the economy and thereby reduce the need for tighter monetary policy."

She noted that it remains uncertain what level of policy rate is needed to produce a certain restrictive effect, and that this level will adjust as broader financial conditions change. "I will continue to closely monitor the labor market, prices, economic growth, consumption and financial conditions to assess whether policy is becoming restrictive."