Dallas Fed President Lorie Logan, in her speech on Saturday, emphasized the importance of maintaining tight financial conditions to prevent resurgence of inflation. She expressed concern that if these conditions are not sustained, progress made in controlling inflation could be reversed.
Logan Logan underscored the significant role that restrictive financial conditions have played in “bringing demand into line with supply and keeping inflation expectations well-anchored”.
However, she noted a recent reversal in this trend, pointing out that long-term yields have relinquished much of the tightening observed over the summer. She warned, “We can’t count on sustaining price stability if we don’t maintain sufficiently restrictive financial conditions.”
Logan also addressed the Federal Reserve’s balance sheet runoff. She indicated that it might be appropriate to consider slowing the pace of this runoff, particularly as overnight reverse repurchase agreement balances approach lower levels.
