Fed officials make case for rate hikes as inflation concerns persist
TLT•Three Federal Reserve officials argued for further interest rate increases on Friday, with Lorie Logan calling for at least two 25-basis-point hikes. The Fed held its target range at 3.75% to 4% earlier in the week.
1. Officials call for hikes
Dallas Fed President Lorie Logan said the Fed needs to implement at least two more 25-basis-point rate increases, then pause to assess economic and financial developments. She said holding rates steady at this week’s meeting reflected volatile markets and gave the public time to adjust to higher borrowing costs.
2. More officials back tightening
St. Louis Fed President Alberto Musalem said additional monetary policy firming would be necessary soon, while Richmond Fed President Thomas Barkin said inflation and solid demand pointed toward further increases, though the pace remained a question. The officials spoke after the Fed’s blackout period ended.
3. December outlook remains uncertain
The Fed raised rates in September, and investors are watching the December meeting as the next opportunity for action. Futures markets have reduced expectations for a December hike, though participants still consider an increase more likely than holding steady. Fed Chair Kevin Warsh said the central bank had made progress on inflation but had not yet achieved price stability.
