Lorie Logan wants higher rates. Not much higher. Just modestly higher. The kind of higher that says I'm doing something without actually doing anything.
Inflation came in better than expected this week. Logan looked at the data. Reviewed the charts. Ran the numbers through her models. Concluded we need tighter policy anyway. Because when good news arrives, the correct response is to ignore it and demand pain.
The word modestly does heavy lifting here. Modestly higher rates. Like being modestly pregnant or modestly on fire. Either you're raising rates or you're not. Either inflation is a problem or it isn't. Logan picked the middle ground between decisive action and doing nothing, which is the Federal Reserve's natural habitat.
She's a regional Fed president. Not a voting member this year. Her opinion carries the same weight as your uncle's stock tips at Thanksgiving. But she said it with conviction, which is what matters in central banking. Sound confident. Use words like modestly. Let the markets figure out what the f*ck you actually mean.
Retail traders heard the news and immediately checked their portfolios. Watched their tech stocks drop. Wondered why a non-voting Fed official from Dallas can move markets by suggesting a quarter-point hike that will never happen. The answer is they're stupid and will never learn.
Logan joins the long tradition of Fed officials who speak in public to say absolutely nothing while moving billions in asset prices. It's a skill. Takes years to master. You have to believe inflation is both under control and out of control simultaneously. You have to want higher rates while rates are already high. You have to use the word modestly without laughing.
The good inflation news wasn't good enough, she said. Which means no inflation news will ever be good enough. We could hit zero percent inflation tomorrow and Logan would call for modestly higher rates just to be safe. Because the Fed's job isn't to respond to data. It's to justify whatever position they already held before the data arrived.
Photo by Dan Dennis on Unsplash
Leave a Comment