2023-10-09 13:33:04
Dallas Federal Reserve Bank President John Logan said the recent spike in long-term U.S. bond yields could reduce the need for the Fed to raise interest rates further.
The president gave a speech at the National Association of Business Economists (NABE) conference held in Dallas on the 9th. According to the manuscript distributed in advance, “If the term premium rises, it may take over some of the monetary authorities’ work to calm the economy, reducing the need for the authorities to tighten policy further.” “There is,” he said.
Term premium is the additional yield investors seek for the risk of owning long-term bonds. Governor Logan said, “There is clearly a role played by rising term premiums in recent yield curve movements,” but “there is uncertainty about the magnitude and sustainability of that role.”
Meanwhile, he said, “as long as there is economic strength behind the rise in long-term interest rates,” monetary authorities may need to tighten further.
news-rsf-original-reference paywall">Original title:Fed’s Logan Says Higher Yields May Mean Less Need to Raise Rates(excerpt)
(Adds and updates the Governor’s remarks)
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