Dallas Federal Reserve President Lori Logan on Thursday became the first of Fed Chairman Kevin Warsh’s new colleagues to publicly call for an interest-rate hike, setting the stage for potential dissent at the central bank’s next rate-setting meeting in just two weeks.

“Inflation has been too high, for too long, and does not appear to be returning to 2%,” Logan said in remarks prepared for delivery in Houston. “I currently believe that generally higher interest rates will better balance the outlook and risks to the FOMC’s maximum employment and price stability goals.”

Logan’s concerns are emblematic of a growing minority at the Fed who believe that keeping short-term borrowing costs on hold is the wrong policy when inflation risks, Logan pointed out to them on Thursday.

“Labor, consumption and fiscal data suggest that monetary policy is not holding back the economy,” Logan said. “If higher inflation kicks in, we’ll need a sharp rate hike to bring it back to target, with a big cost to the labor market. A more moderate restriction now than a severe restriction later.”

Logan noted that consumer price inflation moderated slightly in June, but indicated only a “weak” path back toward the Fed’s 2% goal. “It’s more hope than possibility,” Logan said. “It is time to finish the job of restoring price stability.”

Risks to inflation are rising, she said, from renewed hostilities in the Middle East to threats to reverse recent easing on fuel prices, to the potential for a surge in AI investment to trigger explosive price pressures more broadly.

AI and other new technologies could “eventually” lead to increased productivity that would boost supply and therefore lower prices, she said. “But the potential size and timing of those benefits is uncertain,” Logan said. “The demand effect is already here. And when demand exceeds supply, the result is higher prices.” Warsh became head of the central bank in May and at their first meeting in June, all of his fellow policymakers supported the decision to keep the policy rate in its current 3.50%-3.75% range, although some saw a case for a rate hike.

That unity is fraying, could set the stage for a bigger “family fight” — as Warsh likes to call the Fed’s internal debates — when policymakers convene in Washington on July 28-29. (Reporting by Ann Safir; Editing by Andrea Ricci)