Inflation, the discount window, and banking regulation are crucial economic topics. These issues were raised by Lorie Logan, President and CEO of the Federal Reserve Bank of Dallas. Without a doubt, the economy cannot move forward without addressing them.
According to Logan, US inflation data is particularly important, as it directly affects the national economy. She believes that even if inflation improves, the Federal Reserve should remain cautious when adjusting interest rates. "Because if the labor market and the overall economy is strong, even in that environment, it doesn’t necessarily mean there’s room to cut rates further," Logan said. She has emphasized that the regulator is carefully analyzing geopolitical and political changes, as well as their economic influence.
The head of the Dallas Fed expressed optimism about loan demand. She stressed the need for banking regulation based on banks’ size and risk profile. "In my opinion, every bank in America should be fully set up at the window as part of its liquidity toolkit," Logan emphasized.
Logan noted that both the Federal Reserve and financial institutions need to work together to connect more banks to the discount window. She said that the Fed wanted banks to use the discount window and was working on modernizing it and improving coordination with the FHLB system.
Earlier, Logan pointed to the rise in long-term interest rates, driven by expectations of economic growth and inflation. She emphasized that long-term rates are a key factor in assessing financial conditions. While the Fed is ready to lower rates if necessary, its current focus is on restoring inflation to the 2% target. Additionally, Logan reaffirmed the regulator’s commitment to maintaining price stability.
