Logan says rate path requires at least two more quarter-point moves

Logan offered her views on the economy, inflation, and monetary policy in recent remarks.

• The central bank requires a minimum of two additional quarter-point increases.
• Omitting a rate decision at a given session does not shift the ultimate policy direction.
• A gradual approach to policy changes can minimize the dangers of a sudden economic downturn.
• A step-by-step recalibration allows households, companies and investors to acclimate to increasing borrowing costs.
• The ultimate objective is a somewhat restrictive policy stance.
• When the Fed communicates its target rate, the economy adjusts more smoothly and can still gain from a pause.
• Logan described inflation's failure to move back toward the Fed's 2% goal as "Unacceptable".
• Following 50 basis points of increases, a pause would be logical in order to assess what further steps are needed.
• Financial circumstances are giving the economy a boost.
• Elevated market rates are a signal that investors see more work ahead for monetary policymakers.
• While long-term rates have climbed, their dampening effect on the economy has not been as severe as anticipated.
• The economy is expanding robustly, and consumer outlays are firm.
• The jobs market is in balance, possibly growing a little tighter.

The comments had a hawkish tone but contained some latitude on the timeline. Logan considers an extra 50 basis points of tightening essential, while allowing for a meeting to be skipped or a pause introduced later to evaluate the results. For market participants, the key distinction lies in the schedule of the increases versus the final rate goal. Passing on a meeting would not automatically indicate that the tightening cycle is complete.

Logan's economic outlook reinforces her policy leanings. Growth and consumer expenditure are still vigorous, the jobs market might be tightening, and financial settings continue pushing in the economy's favor. In her opinion, the increase in long-term yields has not exerted enough restraint to eliminate the requirement for more policy tightening. The inquiry after a further 50 basis points will be whether the policy is restrictive enough to steer inflation steadily back to 2%.