diff --git a/src/basic_memory/api/app.py b/src/basic_memory/api/app.py
index a111b899..07a01f1c 100644
--- a/src/basic_memory/api/app.py
+++ b/src/basic_memory/api/app.py
@@ -7,18 +7,14 @@ from fastapi import FastAPI, HTTPException
 from fastapi.exception_handlers import http_exception_handler
 from loguru import logger
 
-import basic_memory
 from basic_memory import db
 from basic_memory.config import config as app_config
 from basic_memory.api.routers import knowledge, search, memory, resource
-from basic_memory.utils import setup_logging
 
 
 @asynccontextmanager
 async def lifespan(app: FastAPI):  # pragma: no cover
     """Lifecycle manager for the FastAPI app."""
-    setup_logging(log_file=".basic-memory/basic-memory.log")
-    logger.info(f"Starting Basic Memory API {basic_memory.__version__}")
     await db.run_migrations(app_config)
     yield
     logger.info("Shutting down Basic Memory API")
diff --git a/src/basic_memory/cli/app.py b/src/basic_memory/cli/app.py
index 8fa0cbc1..bfc0e661 100644
--- a/src/basic_memory/cli/app.py
+++ b/src/basic_memory/cli/app.py
@@ -4,9 +4,7 @@ import typer
 
 from basic_memory import db
 from basic_memory.config import config
-from basic_memory.utils import setup_logging
 
-setup_logging(log_file=".basic-memory/basic-memory-cli.log", console=False)  # pragma: no cover
 
 asyncio.run(db.run_migrations(config))
 
diff --git a/src/basic_memory/cli/commands/mcp.py b/src/basic_memory/cli/commands/mcp.py
index 79cc3d7d..8bd53150 100644
--- a/src/basic_memory/cli/commands/mcp.py
+++ b/src/basic_memory/cli/commands/mcp.py
@@ -17,4 +17,4 @@ def mcp():  # pragma: no cover
     home_dir = config.home
     logger.info(f"Starting Basic Memory MCP server {basic_memory.__version__}")
     logger.info(f"Home directory: {home_dir}")
-    mcp_server.run()
+    mcp_server.run()
\ No newline at end of file
diff --git a/src/basic_memory/cli/commands/sync.py b/src/basic_memory/cli/commands/sync.py
index 71d66be2..20b442e3 100644
--- a/src/basic_memory/cli/commands/sync.py
+++ b/src/basic_memory/cli/commands/sync.py
@@ -203,4 +203,4 @@ def sync(
             logger.exception("Sync failed")
             typer.echo(f"Error during sync: {e}", err=True)
             raise typer.Exit(1)
-        raise
+        raise
\ No newline at end of file
diff --git a/src/basic_memory/cli/commands/tools.py b/src/basic_memory/cli/commands/tools.py
index 75a31410..28af938c 100644
--- a/src/basic_memory/cli/commands/tools.py
+++ b/src/basic_memory/cli/commands/tools.py
@@ -72,7 +72,7 @@ def build_context(
                 max_related=max_related,
             )
         )
-        rprint(context.model_dump())
+        rprint(context.model_dump_json(indent=2))
     except Exception as e:  # pragma: no cover
         if not isinstance(e, typer.Exit):
             typer.echo(f"Error during build_context: {e}", err=True)
@@ -105,7 +105,7 @@ def recent_activity(
                 max_related=max_related,
             )
         )
-        rprint(context.model_dump())
+        rprint(context.model_dump_json(indent=2))
     except Exception as e:  # pragma: no cover
         if not isinstance(e, typer.Exit):
             typer.echo(f"Error during build_context: {e}", err=True)
@@ -137,7 +137,7 @@ def search(
             after_date=after_date,
         )
         results = asyncio.run(mcp_search(query=search_query, page=page, page_size=page_size))
-        rprint(results.model_dump())
+        rprint(results.model_dump_json(indent=2))
     except Exception as e:  # pragma: no cover
         if not isinstance(e, typer.Exit):
             typer.echo(f"Error during search: {e}", err=True)
@@ -149,7 +149,7 @@ def search(
 def get_entity(identifier: str):
     try:
         entity = asyncio.run(mcp_get_entity(identifier=identifier))
-        rprint(entity.model_dump())
+        rprint(entity.model_dump_json(indent=2))
     except Exception as e:  # pragma: no cover
         if not isinstance(e, typer.Exit):
             typer.echo(f"Error during get_entity: {e}", err=True)
diff --git a/src/basic_memory/cli/main.py b/src/basic_memory/cli/main.py
index 18aed9c0..d25dde73 100644
--- a/src/basic_memory/cli/main.py
+++ b/src/basic_memory/cli/main.py
@@ -15,6 +15,5 @@ from basic_memory.cli.commands import (  # noqa: F401  # pragma: no cover
     tools,
 )
 
-
 if __name__ == "__main__":  # pragma: no cover
     app()
diff --git a/src/basic_memory/config.py b/src/basic_memory/config.py
index 6e74b56a..a8d2264f 100644
--- a/src/basic_memory/config.py
+++ b/src/basic_memory/config.py
@@ -3,9 +3,13 @@
 from pathlib import Path
 from typing import Literal
 
+from loguru import logger
 from pydantic import Field, field_validator
 from pydantic_settings import BaseSettings, SettingsConfigDict
 
+import basic_memory
+from basic_memory.utils import setup_logging
+
 DATABASE_NAME = "memory.db"
 DATA_DIR_NAME = ".basic-memory"
 
@@ -60,3 +64,13 @@ class ProjectConfig(BaseSettings):
 
 # Load project config
 config = ProjectConfig()
+
+# setup logging
+setup_logging(
+    env=config.env,
+    home_dir=config.home,
+    log_level=config.log_level,
+    log_file=".basic-memory/basic-memory.log",
+    console=False,
+)
+logger.info(f"Starting Basic Memory {basic_memory.__version__}")
diff --git a/src/basic_memory/mcp/server.py b/src/basic_memory/mcp/server.py
index 2811d47e..ca9b5710 100644
--- a/src/basic_memory/mcp/server.py
+++ b/src/basic_memory/mcp/server.py
@@ -1,15 +1,11 @@
 """Enhanced FastMCP server instance for Basic Memory."""
 
 from mcp.server.fastmcp import FastMCP
-
-from basic_memory.utils import setup_logging
+from mcp.server.fastmcp.utilities.logging import configure_logging
 
 # mcp console logging
-# configure_logging(level='INFO')
+configure_logging(level="INFO")
 
 
-# start our out file logging
-setup_logging(log_file=".basic-memory/basic-memory.log")
-
 # Create the shared server instance
 mcp = FastMCP("Basic Memory")
diff --git a/src/basic_memory/utils.py b/src/basic_memory/utils.py
index 4e8d1227..7204cfb3 100644
--- a/src/basic_memory/utils.py
+++ b/src/basic_memory/utils.py
@@ -1,5 +1,5 @@
 """Utility functions for basic-memory."""
-
+import logging
 import os
 import re
 import sys
@@ -10,7 +10,6 @@ from loguru import logger
 from unidecode import unidecode
 
 import basic_memory
-from basic_memory.config import config
 
 import logfire
 
@@ -65,8 +64,8 @@ def generate_permalink(file_path: Union[Path, str]) -> str:
 
 
 def setup_logging(
-    home_dir: Path = config.home, log_file: Optional[str] = None, console: bool = True
-) -> None:  # pragma: no cover
+    env: str, home_dir: Path, log_file: Optional[str] = None, log_level: str = "INFO", console: bool = True
+, ) -> None:  # pragma: no cover
     """
     Configure logging for the application.
     :param home_dir: the root directory for the application
@@ -79,15 +78,14 @@ def setup_logging(
     logger.remove()
 
     # Add file handler if we are not running tests
-    if log_file and config.env != "test":
+    if log_file and env != "test":
         # enable pydantic logfire
         logfire.configure(
             code_source=logfire.CodeSource(
                 repository="https://github.com/basicmachines-co/basic-memory",
                 revision=basic_memory.__version__,
-                root_path="/src/basic_memory",
             ),
-            environment=config.env,
+            environment=env,
             console=False,
         )
         logger.configure(handlers=[logfire.loguru_handler()])
@@ -100,7 +98,7 @@ def setup_logging(
         log_path = home_dir / log_file
         logger.add(
             str(log_path),
-            level=config.log_level,
+            level=log_level,
             rotation="100 MB",
             retention="10 days",
             backtrace=True,
@@ -109,7 +107,13 @@ def setup_logging(
             colorize=False,
         )
 
-    # Add stderr handler
-    logger.add(sys.stderr, level=config.log_level, backtrace=True, diagnose=True, colorize=True)
+    if env == "test" or console:
+        # Add stderr handler
+        logger.add(sys.stderr, level=log_level, backtrace=True, diagnose=True, colorize=True)
 
-    logger.info(f"ENV: '{config.env}' Log level: '{config.log_level}' Logging to {log_file}")
+    logger.info(f"ENV: '{env}' Log level: '{log_level}' Logging to {log_file}")
+
+    # Get the logger for 'httpx'
+    httpx_logger = logging.getLogger("httpx")
+    # Set the logging level to WARNING to ignore INFO and DEBUG logs
+    httpx_logger.setLevel(logging.WARNING)
\ No newline at end of file
diff --git a/tests/__init__.py b/tests/__init__.py
index 9d7eaeae..80561ae8 100644
--- a/tests/__init__.py
+++ b/tests/__init__.py
@@ -1,4 +1,4 @@
-from basic_memory.config import config
+import os
 
 # set config.env to "test" for pytest to prevent logging to file in utils.setup_logging()
-config.env = "test"
+os.environ["BASIC_MEMORY_ENV"] = "test"
diff --git a/uv.lock b/uv.lock
index 93e27bfa..e042aa03 100644
--- a/uv.lock
+++ b/uv.lock
@@ -79,7 +79,7 @@ wheels = [
 
 [[package]]
 name = "basic-memory"
-version = "0.6.0"
+version = "0.7.0"
 source = { editable = "." }
 dependencies = [
     { name = "aiosqlite" },