Logan Seeks Another 50 Basis Points in Rate Hikes to Combat Inflation

The US 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 Federal Reserve's 2% goal, according to Dallas Fed President Lorie Logan.

In her remarks prepared for Texas business executives and community leaders, Logan said that the Fed's quarter-point policy rate increase last month was an important first step in tightening policy. However, she estimated that the target range needs to rise an additional 50 basis points or more to appropriately balance the outlook and risks for the dual mandate goals.

Logan emphasized that restoring price stability is a priority, citing that inflation does not look like it will go much lower than 2.5% without further rate hikes. She also noted that higher long-term bond yields show market participants expect strong economic growth and a higher Fed policy rate, although they may also reflect higher term premiums.