Federal Reserve Bank, Dallas President Lorie Logan says she wants a 25bp rate hike, not 50, at the January 31 / February 1 Federal Open Market Committee (FOMC) meeting.
- Need to be flexible, robust
- Not helpful at this time to lock in peak rate or precise rate path
- Says she supports slowing rate hike pace further at fed's upcoming meeting
- If slower rate hike pace eases financial conditions, can offset that by gradually raising rates to a higher level than previously expected
- Slower rate hike pace does not signal any less commitment to achieving inflation goal
- Fed is committed to restoring price stability
- Likely to need to gradually raise rates until 'convincing evidence' inflation on track toward 2%
- Even after pausing rate hikes, may need to raise rates further if outlook or financial conditions call for it
- Most important risk i see is tightening policy too little and failing to keep inflation in check
- Elevated services inflation is symptom of overheated economy, tight labor market
- 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
Fed officials are piling on the +25bp as opposed to the +50bp bandwagon.
Dallas Fed Pres. Logan