Fed's Logan signals support for ending flexible average inflation targeting

June 3 (Reuters) - Dallas Federal Reserve Bank President Lorie Logan on Tuesday signaled she'd like to return to a monetary policy framework that aims for 2% inflation without trying to make up for past shortfalls, and that responds to the labor market not just when it is weakening but also when it seems to be running too hot.

The Fed's current framework was adopted in 2020 during the height of the COVID-19 pandemic and following a decade of too-low inflation and low interest rates. It calls for the Fed to make up for bouts of low inflation with periods of higher inflation, an approach known as "flexible average inflation targeting."

"We are now in a higher-rate environment, and the postpandemic experience provides ample evidence of the potential for inflation to surge far above target," Logan said. "It seems more appropriate to me to focus on achieving our inflation target going forward, rather than trying to make up for past shortfalls of inflation."

And while the current framework emphasizes that Fed policy need not respond when employment exceeds sustainable levels, Logan said she is "inclined to pay more attention to increases of employment above the maximum sustainable level, not just shortfalls from that level."

The Fed is currently conducting a review of its policy framework, expected to wrap up this summer.

Logan did not focus on current monetary policy or the economic outlook in her remarks opening a session in El Paso, Texas that was to focus on getting input from local businesses and community leaders into how the Fed's conduct of monetary policy affects them.