Fed's Logan: We shouldn't rule out rate hike given recent easing in financial conditions

<ul><li>Premature easing of financial conditions could allow demand to pick back up</li><li>If we don't maintain sufficiently tight conditions, there is a risk inflation will pick back up, reversing progress</li><li>Appropriate to consider parameters to guide decision to slow Fed's balance sheet runoff</li><li>Labor market 'still tight' but continues to rebalance</li><li>Financial system overall has 'more than ample' bank reserves and liquidity, though no longer 'super abundant'</li><li>Inflation in a 'much better place' than last January but Fed's job is not yet complete</li><li>We should slow the pace of asset runoff as the Fed's overnight reverse repurchase balances approach a low level</li></ul><p>The Fed's repo balances should approach a low level around mid-year so we should start to hear more talk about slowing the pace of runoff soon, though I don't think it will be much of a factor for markets (though others disagree). </p><p>Overall, Logan doesn't sound like someone who is even close to supporting a rate cut.</p>

This article was written by Adam Button at www.forexlive.com.