Dallas Fed President Calls for Further Interest Rate Hikes to Combat Inflation

Lorie Logan, President of the Dallas Federal Reserve, stated on Thursday that the U.S. central bank needs to raise interest rates by at least 50 basis points to achieve a modestly restrictive monetary policy and steer inflation back towards the 2% target. In remarks delivered to business and community leaders in Dallas, Texas, Logan characterized last month's quarter-point increase, which raised the policy rate to a range of 3.75% to 4.00%, as an essential first step in tightening monetary policy.

Logan emphasized that current policy is not restrictive enough, noting that while inflation is gradually easing, it is unlikely to drop below 2.5% without additional rate hikes. She indicated that further increases would help reverse the 75 basis points of cuts made by the Federal Open Market Committee late last year. Logan described the economy as strengthening and the labor market as balanced, suggesting that a few more hikes are necessary to address the risks associated with employment and inflation goals.

Her comments come amid rising long-term Treasury yields, which recently reached their highest levels in 24 years. Logan acknowledged that these yields may reflect investor expectations of strong economic growth and a higher policy rate, but they could also indicate increased term premiums that might reduce the need for further tightening. The upcoming jobs report for September is anticipated to provide additional insights into the labor market and economic conditions, which will inform future Fed policy decisions.

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Source: KLEA News