Fed's Logan: It's clear that Fed needs at least two more quarter-point rate hikes

Logan is a hawk and has dissented in favor of hikes so her comments might not be as hawkish as feared after what we heard today from Waller:Excess inflation is unacceptableClear that Fed needs at least two more quarter-percentage-point rate increasesSays it may be possible to raise interest rates more rapidly this winter than US central bank has moved so farImportant to ‘promptly’ achieve balance in outlook, risks for inflation and employmentAdjusting policy gradually can reduce risk that economic activity deteriorates more sharply than necessaryAfter two more rate hikes, it would make sense to pause and assess what further action may be appropriateHigher bond-market rates signal monetary policy has work to do, not an independent tailwind for activityFed policy rate is at least 50 basis points below a modestly restrictive levelAccommodative policy is adding to inflationary pressures; real Fed funds rate is 78 basis points, data suggestWartime energy disruptions not the only source of price pressuresConcerned that higher-than-expected consumer price index means personal consumption expenditures inflation could riseInflation is trending meaningfully higher than 2% goalLabor market is balanced and even tightening a bitEconomic growth is strong, consumer spending solid, business spending robustPrice pressures also broader than tariffs, and broad trend is likely to persistThe whole market is repricing Fed action today, basically adding another hike to the next 12 months picture in light of comments from Waller and the CPI data. You can see that in two-year yields as well, which are up 20 basis points on the day to 4.75%. There is this growing chorus that the current Fed funds rate of 3.75-4.00% isn't holding back the economy, in part due to intense AI capex. The thing is, by the time the Feds rate peaks (priced for H2 2027, the AI capex could be starting to dry up. This article was written by Adam Button at investinglive.com.