Fed's Logan: Less need to hike rates if higher long-term rates are due to higher premiums

Eren Sengezer FXStreet

Continued restrictive financial conditions will be necessary to bring down inflation, Dallas Fed President Lorie Logan said on Monday, per Reuters.

"If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the fed funds rate," Logan added. "However, to the extent that strength in the economy is behind the increase in long-term interest rates, the FOMC may need to do more."

Key quotes

"We are attentive to risks on both sides of fed's mandate, but high inflation is the most important risk."

"Progress on inflation is encouraging but it's too early to be confident it is headed to the Fed's 2% target in a sustainable, timely way."

"Labor market is still very strong, wages are still solid."

"Output, spending have been surprisingly strong; outlooks for consumer are mixed."

Market reaction

The US Dollar Index stays retreated from daily highs following these comments and was last seen gaining 0.2% on the day at 106.32.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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