Fed’s Logan Advocates for Further Rate Hikes, Citing Need for Restrictive Policy Amidst Rising Yields

• Fed’s Logan advocates for at least 50 bps more in rate hikes.
• Rising bond yields could partially offset the need for further tightening.
• Hawkish stance supports US dollar amid inflation concerns.

Federal Reserve Bank of Dallas President Lorie Logan stated on Thursday that the central bank must increase short-term borrowing costs by at least an additional 50 basis points to achieve a “modestly restrictive” monetary policy and bring inflation back to its target. Logan emphasized that current policy is not yet restrictive, despite a strengthening economic expansion and a balanced labor market. She also noted that rising Treasury yields, which may indicate increased term premiums, could contribute to tightening financial conditions, potentially reducing the overall number of rate hikes required. This hawkish stance, which contrasts with some recent market expectations following softer economic data, could provide support for the US dollar, particularly if upcoming economic indicators are strong. The comments come amidst ongoing concerns about energy-driven inflation risks, with oil prices recently surpassing $100.