Dallas Fed’s Logan Says Fed Needs 50 More Basis Points Before a Pause

Dallas Fed President Lorie Logan said Friday the Federal Reserve should raise its benchmark rate at least twice more, by 25 basis points each, before pausing to assess economic and financial conditions. The recommendation would add 50 basis points, a hawkish signal for markets sensitive to borrowing costs, including crypto assets.

Logan supported the Fed’s 10-2 decision this week to hold the federal funds target range at 3.75%-4.00%, while arguing inflation still requires more restraint to return to the 2% target. She said gradual moves would give households, businesses and investors time to adjust to higher rates and reduce the risk of an unnecessarily sharp downturn in economic activity.

She also pointed to uncertainty around technology investment and geopolitics as sources of market volatility. Logan said the Fed should communicate its policy goals clearly and that skipping a single meeting would not change its ultimate policy goal.

Long-term borrowing costs have risen mainly because investors expect stronger growth and higher interest rates, Logan said, rather than because those costs are independently restraining the economy.