Federal Reserve policymakers held the federal-funds target range at 3.75%-4.00% in a 10-2 vote this week. Dallas Fed President Lorie Logan said the Federal Open Market Committee needs at least two further 25-basis-point increases, then should pause to examine economic and financial developments. [E12] [E14]
St. Louis Fed President Alberto Musalem said persistent demand had kept growth at or above potential and described the labor market as stable around full employment. He said inflation exceeded the FOMC’s 2% target, saw the risks as tilted toward persistent above-target inflation, and said additional policy firming would be necessary soon; in his view, earlier incremental adjustments are usually less disruptive than a larger later move. [E1] [E2] [E3] [E4] [E5] [E6] [E16]
Logan described economic growth as strong, consumer spending as solid and business investment as robust. She said core PCE inflation was 3.1% over the 12 months through September and estimated the current target range was at least 50 basis points below a modestly restrictive level. [E7] [E8] [E9] [E10] [E11]
Reuters reported that Logan’s call was among the most explicit rate guidance from a U.S. central banker since Kevin Warsh became chair in May. She said the Fed should make its policy destination clear, a position Reuters said contrasts with Warsh’s view that such guidance belongs in crisis times. The change since this paper’s June coverage is that the post-pause debate now includes public arguments for a specified next sequence of increases. [E13] [E15]