Fed's Logan Sees Room for Further Rate Hikes Amid Hawkish Tone

The Federal Reserve's (Fed) policy rate is likely to increase by an additional 50 basis points or more, according to Logan, a Fed official. This hawkish message was delivered with a 9.2/10 FXS Speechtracker score, significantly higher than the historical average of 8.1/10. The emphasis on rising term premiums may reduce the need for further tightening, but explicit calls for at least 50 bps more in rate hikes and several additional moves to ensure inflation returns to 2% signal a net hawkish tone.

The characterization of policy as not yet restrictive, alongside a strengthening expansion and balanced labor market, suggests scope for further tightening despite acknowledgment of uncertainty around the terminal rate. The FXS Fed Sentiment Index rises by 1.68 points to 136.59, firmly in hawkish territory well above the neutral 100 threshold.