Fed's Logan: Another rate hike shouldn't be ruled out
On January 7th, Fed's Logan warned that the Fed may need to resume raising short-term policy rates to prevent a recent decline in long-term bond yields from reigniting inflation. "If we do not maintain sufficiently tight financial conditions, we face the risk of inflation rebounding and reversing the progress we have made," Logan said. "Restrictive financial conditions play an important role in keeping demand and supply in line and maintaining stable inflation expectations," she said, noting that the inflation rate is already close to the Fed's target of 2% and that the labor market, although still tight, is rebalancing. "If we do not maintain sufficiently strict financial conditions, we cannot expect to maintain price stability."
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