Fed's Logan: The Fed needs at least two more rate hikes, totaling 50 basis points.

October 31 - Dallas Fed President Logan said on Friday that under the current economic outlook, the Federal Reserve needs at least two more interest rate hikes of 25 basis points each, raising the policy rate by a cumulative 50 basis points, and then pausing to assess economic and financial conditions before deciding on next steps.

Logan participated this week in the Fed's 10-2 vote supporting maintaining the federal funds rate target range at 3.75%-4.00%. Logan believes that current inflation still needs further suppression, and the policy rate should be raised by at least another 50 basis points to sufficiently restrict the economy and push inflation back to the 2% target. She noted that the outlook for technology investment and geopolitical tensions are causing volatility in financial markets, and in this environment, gradual policy adjustments help households, businesses, and market participants adapt to higher interest rates and reduce the risk of unnecessary sharp deterioration in economic activity.

Logan also emphasized that the Fed should clearly communicate its policy goals, which differs from Fed Chair Warsh's view of providing such policy guidance only during crises. She believes that the current financial environment is still supporting economic growth, and the rise in long-term borrowing costs mainly reflects investors' expectations of higher economic growth and interest rates, rather than an independent drag on the economy. Even if the Fed skips a rate hike at one meeting, it will not change the ultimate policy goal; as long as the market understands the Fed's policy plan, the specific timing of rate hikes has limited impact on the long-term rates borne by borrowers.