Logan says Treasury market functioning 'very well,' Fed needs to strengthen support tools
TLT•Dallas Fed President Lorie Logan said the Treasury market is functioning “very well,” but urged the Fed to strengthen market and bank funding support tools without providing unnecessary economic stimulus.
1. Market support tools
Logan said the Fed should strengthen its tools for supporting Treasury market functioning while avoiding actions that work at cross purposes with monetary policy. She said she sees no need for intervention currently, but warned that intervention during a policy-tightening cycle could complicate the Fed’s communications.
2. Bank funding access
Logan said banks have improved their access to contingent funding and should continue preparing to use facilities such as the Fed’s discount window. She said the Fed should extend discount window operations to weekends and holidays, in part because the Fed plans to extend Fedwire Funds operations to Sundays and weekday holidays within the next two to three years.
3. Other Fed proposals
Logan also urged the Fed to develop the ability to centrally clear its repo operations and to improve its readiness to lend to designated financial market utilities in unusual or exigent circumstances.
