Logan says more Fed rate hikes needed as inflation lingers
Federal Reserve Governor Lorie Logan says growth is strengthening and the labour market is balanced, even as traders cut the odds of an October hike to 50-50
Published
Chart: Fed target rate, top of the range
Federal Reserve Governor Lorie Logan said Thursday that inflation is falling but not on track to reach the Fed's 2% target, and that more interest rate hikes are likely needed. She said economic growth is strengthening and the labour market remains well balanced. A few more increases, she said, would at minimum reverse last autumn's rate cuts, though the ultimate level needed is still uncertain.
Her remarks echo the hawkish tone that ran through Fed commentary in late September, when officials including Beth Hammack, Michael Barr and Austan Goolsbee argued that inflation's persistence justified tolerating market pain in exchange for further tightening. Since then, sentiment has shifted. Traders cut the odds of an October rate rise to 50-50 from 70% after New York Fed President John Williams said there was no urgency to act, and Fed Vice Chair Philip Jefferson has twice said policymakers may need more time before their next move.
Recent data has added to the case for patience.
Logan's call for additional hikes, framed as merely undoing last year's cuts, widens rather than narrows the gap between official rhetoric and current market pricing. That leaves upcoming economic data as the likely tie-breaker for long-dated Treasury yields.