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Fed’s Logan: Fed still needs at least two more rate hikes, totaling 50 basis points
BlockBeats reported that October 31, Dallas Fed President Logan said on Friday that, given the current economic outlook, the Fed still needs at least two more rate hikes of 25 basis points each, raising the policy rate by a cumulative 50 basis points, and then pause rate hikes and assess economic and financial conditions to determine its next steps.
Logan participated this week in the Fed’s 10 to 2 vote, supporting keeping the federal funds target range at 3.75%—4.00%. Logan believes that current inflation still requires further restraint, and that the policy rate should be raised by at least another 50 basis points to sufficiently restrain the economy and bring inflation back to the 2%target. She noted that the outlook for technology investment and geopolitical conditions are causing volatility in financial markets. In this environment, gradual policy adjustments would help households, businesses, and market participants adapt to higher interest rates and reduce the risk of an unnecessary sharp deterioration in economic activity.
Logan also stressed that the Fed should clearly communicate its policy objectives, differing from Fed Chair Waller’s view that such policy guidance should be provided only during crises. She believes that current financial conditions continue to support economic growth, while rising long-term borrowing costs mainly reflect investors’ expectations of economic growth and higher interest rates, rather than an independent drag on the economy. Even if the Fed skips a meeting without raising rates, this would not change the ultimate policy objective; as long as markets understand the Fed’s policy plans, the specific timing of rate hikes would have limited impact on the long-term interest rates borne by borrowers.
Original link https://m.theblockbeats.info/flash/374746