Fed’s Collins, Logan, and Harker anticipate slower pace of rate hikes

Yahoo Finance’s Jennifer Schonberger joins the Live show to break down the latest commentary from Boston Fed President Susan Collins, Dallas Fed President Lorie Logan, and Philadelphia Fed President Patrick Harker on the need for further rate hike increases moving forward.

Video transcript

JENNIFER SCHONBERGER: This morning, we heard from Boston Fed President Susan Collins, who says she expects further rate hikes from here, though at a slower pace, pointing to still a high services inflation driven by wage growth. Collins, speaking at the Boston Fed this morning, said, quote, "There is more work to do. I anticipate the need for further rate increases, perhaps at a slower pace depending on incoming data before holding rates at a sufficiently restrictive level for some time."

Collins says she thinks rates, which stand in the range of 4 and 1/4% to 4 and 1/2% right now, will need to be raised to just above 5% before holding them there for some time. She says rates are in restrictive territory already and that we may be nearing peak. So it makes sense to raise rates at a slower pace so as to balance the risks of bringing down inflation versus pushing up unemployment by a lot.

Now, similarly, Dallas Fed President Lorie Logan, on a similar page as Collins, speaking last night in Austin, Texas. Logan says she wants to slow the pace of rate hikes as well to make sure the Fed walks the tightrope of reining in inflation, while not sinking the economy.

Logan saying, quote, "That's why I supported the FOMC's decision last month to reduce the pace of rate increases. And the same considerations suggest slowing the pace further at upcoming meetings-- at the upcoming meeting. To be clear, I don't see the argument for a slower pace as depending very much on the latest data. A slower pace is just a way to ensure we make the best possible decisions."

Now Logan says she's watching financial conditions and says if they loosen, the Fed could always raise rates further, even after pausing them. Now yesterday, we heard from Philadelphia Fed President Patrick Harker, who also is in favor of slowing down rates to a pace of 25 basis points at the next meeting, though St. Louis Fed President James Bullard reiterated yesterday, he wants to put the pedal to the metal, implying perhaps 50 basis points at the next meeting, though he is not a voting member. We will hear this afternoon from Vice Chair Lael Brainard.