Fed’s Logan: Policy rate must increase by additional 50 bps or more
Federal Reserve (Fed) Bank of Dallas President Lorie Logan said on Thursday that the central bank will need to raise short-term borrowing costs by at least another half of a percentage point to turn monetary policy "modestly restrictive" and get inflation back on track to the target.
Federal Reserve Bank of Dallas President Lorie Logan has stated that the central bank will need to raise short-term borrowing costs by an additional 50 basis points or more to achieve a modestly restrictive monetary policy and bring inflation back on track to the 2% target. The recent increase in long-term yields may signal market expectations of higher interest rates.
Logan emphasized that the current monetary policy is not yet restrictive, and further tightening is necessary despite economic expansion and a balanced labor market. She highlighted the role of higher yields in potentially reducing the need for additional rate hikes, but reiterated that at least a few more rate increases would be required to reverse last fall's reductions and reach the Fed's 2% inflation target.
The US Dollar Index (DXY) gained 0.52% on the day at 102.00, reflecting a more hawkish stance from the Fed. The Federal Open Market Committee (FOMC) will monitor bond yield changes and evaluate their impact on inflation and monetary policy decisions.
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