Logan: US Interest Rates Must Rise Another 50 BPS
The Federal Reserve's Logan has delivered a notably more hawkish message, indicating that policy rates must increase by an additional 50 bps or more. This assessment is reflected in the Fed's Speechtracker score, which stands at 9.2/10, significantly above the historical average of 8.1/10.
The emphasis on higher long-term yields potentially reducing the need for additional tightening seems to be at odds with Logan's explicit calls for more rate hikes and several additional moves to ensure inflation returns to 2%. This reinforces a net hawkish tone that is supportive of the Dollar and U.S. yields.
The characterization of policy as not yet restrictive, alongside a strengthening expansion and balanced labor market, signals scope for further tightening despite acknowledgment of uncertainty around the terminal rate.