Fed's Logan calls for at least two more quarter-point rate rises

Her call puts her nearer the two dissenters who lost the October 28 vote than the officials who carried the hold, and above the pace most forecasters and traders expect.

Lorie Logan says the Fed needs at least two more rate rises of 25 basis points each, siding with the hawks who lost the argument at the last meeting. On October 28 the Fed held its key rate at 3.75-4.00 per cent on a 10-2 vote, with Cook and Hammack dissenting in favour of an increase. Logan's position is closer to theirs than to the one that won.

She has been consistent. On October 1 she said more hikes were needed because inflation lingers, with growth strengthening and the labour market balanced. What is new is the number. Two moves is a commitment to a path, and it comes after a hold.

The officials who carried that hold are not arguing for standing still, but they are arguing about speed. Barkin of the Richmond Fed says the question in fighting inflation is the pace, not the direction. Waller said on October 8 that more hikes are needed but not necessarily back to back. Chair Kevin Warsh has said the committee's job is price stability, and that the usual link between oil and market interest rates has broken. Hammack, who dissented, said on October 12 that she is open on pace.

That leaves Logan ahead of the forecasters as well. BofA expects 25 basis point rises in December and again in March 2027, and JPMorgan's Yuxuan Tang expects moves in December and the first quarter of 2027, taking 10-year Treasury yields to 5.25-5.5% by midyear. Traders, who had already been repricing away from a hike before the end of 2026 by October 22, are further still from her view.

The data do not settle it. US PCE inflation eased to 3.1 per cent in September against 3.6 per cent expected, but the monthly readings in the same release picked up pace. A cooler annual rate gives the patient camp its argument, and hotter monthly figures give Logan hers. Until one of them wins, the risk is that the market has priced a slower and shorter cycle than the hawks want.