Fed Logan
These are certainly not conciliatory comments.
- believes it is “much too early” to think about reductions
- More uncertainty needs to be resolved about the economic path we are on.
- The FOMC should remain ready to respond appropriately if inflation stops falling
- Increasingly concerned about upward risks to inflation
- I think it will soon be appropriate for the Fed to decide when to slow (not stop) the runoff of its balance sheet.
- I’m not ready to factor higher trend productivity into my forecasts
The Dallas Fed has always been a haven for hawks, so this isn’t a shock, but these are probably the harshest comments this year. The comment about “responding appropriately” isn’t entirely clear, but it sounds like increases, which no one has talked about.
The U.S. dollar did not move much following these comments, but some minor selling occurred in 2-year bonds, increasing yields by 1 to 1.5 basis points.
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