Fed hike calls grow as Logan wants at least two more increases

Two days after holding rates steady, Federal Reserve officials made clear the pause is not the end. Fed hike calls dominated Friday as the post-meeting blackout lifted, with three regional presidents arguing that inflation still requires higher borrowing costs.

What happened

Dallas Fed President Lorie Logan, a voter this year, said in prepared remarks at Davidson College that the committee should deliver no fewer than two additional quarter-point increases and then pause to take stock. She called the level and duration of above-target inflation unacceptable, while adding that skipping a meeting does not change the policy destination.

St. Louis Fed President Alberto Musalem, a non-voter until 2028, said additional firming will be necessary "and soon," arguing that smaller, earlier moves are less disruptive than abrupt ones later. Richmond Fed President Tom Barkin told SiriusXM the direction of travel is straightforward and the open question is pace.

The committee voted 10-2 this week to keep the target range at 3.75% to 4%, with Cleveland's Beth Hammack and Governor Lisa Cook dissenting in favor of a hike, Reuters reported.

Why it matters

Markets already lean that way. CME FedWatch showed roughly 76% odds of a quarter-point increase at the December 8-9 meeting, CNBC said, though Reuters noted futures had been trimming those bets amid Friday's tech slide.

Logan's explicit guidance stands out because Chair Kevin Warsh, at his press conference, did not say what he expects in December. He admitted the Fed has not yet achieved price stability but said it is working on it.

For borrowers, the message is that the September hike was not a one-off. Our coverage of the Fed split hold and the Treasury yield plunge shows how bond markets have been torn between hawkish central bankers and AI-driven growth fears.

Inflation pressure is broad, according to Barkin. Businesses in his district report rising costs, from diesel to computer chips to skilled-worker wages, and a willingness to pass them on after four or five years of elevated prices. Musalem argued that monetary policy and financial conditions remain accommodative even after recent tightening in markets. Taken together, the Fed hike calls describe a committee that sees the September increase as a start and wants markets to price a higher end point, even if the timing of each step stays flexible.

What's next

Next week brings the October jobs report and Tuesday's midterm elections, both likely to shape December odds. CNBC's report on the speeches quotes Logan and Musalem at length.

Reuters flagged one twist: if the AI investment boom cools, that could ease price pressures and reduce the need to tighten. The strength of these Fed hike calls will be tested against that slowdown risk.

Hammack and Cook, who both voted for a hike this week, have yet to explain their dissents publicly. Their remarks, likely in coming days, could add to the hawkish chorus or reveal nuance about timing.