Fed’s Logan calls for ’50 bps or more’ in rate hikes

Dallas Fed President Lorie Logan has called for the Federal Reserve to raise the target range for short-term borrowing costs by an additional 50 basis points to achieve its dual mandate goals of price stability and full employment. Logan stated that while the Fed's recent quarter-point increase in the policy rate was a significant step, further hikes are necessary to restore price stability.

The economy is showing strength, and the labor market is in a balanced state, but inflation is not expected to fall much below 2.5% without additional rate hikes. Logan emphasized that higher long-term bond yields reflect expectations of robust economic growth and a higher Fed policy rate, but they may also be influenced by term premiums.

She noted that the exact level of policy rate needed to create some restriction is uncertain and may change over time based on the broader financial environment. Logan will continue to monitor labor markets, prices, growth, consumption, and financial conditions to determine if policy is becoming more restrictive.