Fed’s Logan Calls for at Least Two More Rate Hikes as Officials Signal December Increase

WASHINGTON, Oct. 30 (TodayViralUSA) — Two Federal Reserve presidents said Friday that interest rates will need to rise again to bring down stubborn inflation, offering the clearest signals yet that the central bank is likely to resume raising borrowing costs in December after holding them steady this week.

Dallas Fed President Lorie Logan, who votes on monetary policy this year, said the Fed needs at least two more quarter-point increases. “It remains clear to me, given the current outlook, that the FOMC needs to implement at least two more 25-basis-point rate increases,” Logan said in prepared remarks for students at Davidson College in North Carolina. After that, she said, “it would make sense in my view to pause and examine economic and financial developments to determine what further action may be appropriate.”

St. Louis Fed President Alberto Musalem, who does not vote this year, said that “additional firming of monetary policy will be necessary, and soon,” adding that “incremental adjustments made earlier are usually less disruptive than larger and abrupt actions taken later.”

Why the Fed held this week

The Federal Open Market Committee voted 10-2 on Wednesday to keep its benchmark rate in a range of 3.75% to 4%, saying economic activity is expanding at a strong pace and inflation “remains elevated.” Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of an immediate quarter-point increase. The Fed last raised rates in September.

Logan, who backed the decision to hold, said pausing gave households and markets time to adjust amid turbulence. “Financial markets have been volatile in response to news on the technology investment outlook and geopolitical developments,” she said. “In such an environment, adjusting policy more gradually can help households, businesses and market participants adapt to higher rates.” Skipping a meeting, she added, “does not change the monetary policy destination.”

Richmond Fed President Thomas Barkin told SiriusXM that with inflation high, demand solid and unemployment relatively low, “the direction of travel is pretty straightforward,” though the pace of increases remained the question.

Markets bet on December

Traders in fed funds futures were pricing in about a 76% chance of a quarter-point hike at the Fed’s December meeting, according to CME Group’s FedWatch tool, CNBC reported.

The comments also highlighted a split over how the Fed communicates. Since taking over as chair in May, Kevin Warsh has pulled back on offering guidance about the path of policy, arguing such signals belong to times of crisis. Logan argued the opposite, saying the Fed should make its destination clear so that “the precise timing of each rate increase has little effect on the longer-term rates most borrowers pay.” Neither Cook nor Hammack issued a formal explanation of their dissents on Friday, a break from recent practice, Reuters reported.