Fed's Logan supports slower rate hike pace, possibly higher stopping point
18.01.2023, 22:14

Fed's Logan supports slower rate hike pace, possibly higher stopping point

Dallas Federal Reserve President Lorie Logan laid out a case for slowing the pace of the U.S. central bank's interest-rate hikes so as to better calibrate monetary policy to an uncertain economic outlook, but signaled rates could ultimately rise further than many now expect, reported Reuters on late Wednesday.

Key comments

If you’re on a road trip and you encounter foggy weather or a dangerous highway, it’s a good idea to slow down.

That’s why I supported the (Fed's) decision last month to reduce the pace of rate increases. And the same considerations suggest slowing the pace further at the upcoming meeting.

My own view is that we will likely need to continue gradually raising the Fed funds rate until we see convincing evidence that inflation is on track to return to our 2% target in a sustainable and timely way.

The most important risk I see is that if we tighten too little, the economy will remain overheated, and we will fail to keep inflation in check.

Need to be flexible, robust.

Not helpful at this time to lock in peak rate or precise rate path.

Some signs of slower labor market, but would need to see a lot more data to be convinced it is no longer overheated.

Tightening too much or too fast could weaken labor market more than necessary.

Confident we have room to continue reducing balance sheet 'for quite some time'.

Would be comfortable seeing temporary use of fed's standing repo facility.

Market reaction

Considering the usual inactivity during the early market hours on Thursday, the US Dollar remained unimpressive of these comments while keeping the late Wednesday’s rebound from the lowest levels since May 31, 2022.

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