Dallas Fed’s Logan calls for at least two more rate hikes, potentially at a faster pace

Dallas Federal Reserve President Lorie Logan said during a speech in Houston on Tuesday that, given the current outlook, the Federal Open Market Committee—the Fed body that sets interest-rate policy—needs at least two more rate increases of 25 basis points, or 0.25 percentage points, each.^[1] She also called for potentially speeding up the pace of increases.^[2] Her remarks express her policy preference; any rate change still requires a committee decision.^[1]

If the committee adopts Logan’s proposal, the two increases would lift the policy rate by at least half a percentage point in total.^[1] Higher rates would work through variable-rate loans and new borrowing: households could cut back on credit-dependent purchases such as homes, while businesses could delay investment. A faster pace would leave borrowers less time to adjust their budgets.^[2]

Treasury yields help set the price of many loans and bonds. On November 10, the two-year yield rose to 4.73% from 4.56% in the previous session, while the 10-year rose to 4.98% from 4.88%. Those moves indicate tighter financing conditions, although the supplied evidence does not establish how much Logan’s remarks contributed. For businesses replacing maturing debt with new borrowing, higher financing costs can squeeze profits.

Impact

What to watch next

• US initial jobless claims on November 12 will test whether labor demand is cooling; persistently low claims would support the view that the economy can withstand further tightening.
• The October US Producer Price Index, due November 13, will show whether business-level price pressures are easing; slower increases would weaken the case for additional tightening.