【TMGM Financial Recap】Not Just More Rate Hikes, but Faster Ones! Fed Voting Member Logan Strikes a Hawkish Tone as December Hike Odds Reach 100%

Logan holds voting rights on the FOMC this year but will become a non-voting member in 2027. Her remarks echoed Fed Governor Christopher Waller’s framework, outlined the same day, of a 25-basis-point hike in December, with 50 basis points possible if necessary. They also contrasted with Chair Kevin Warsh’s cautious stance and refusal to provide guidance on the interest rate path. Market pricing has already moved ahead: the probability of a December rate hike has reached 100%, while the likelihood of a 50-basis-point increase has risen from 0% to 15.3%.

Her voting record also deserves attention. Logan dissented against a similar decision in July but sided with the majority in the October 28 decision to keep rates unchanged. This pattern suggests two things: she is not a permanent hawk who demands rate hikes regardless of the data, and she chose to support the majority in October. However, her assessment of the current rate level is that it is “not restrictive enough,” rather than “broadly appropriate.” In her November 10 remarks, she explained why: “The longer inflation stays above target, the greater the risk that inflation expectations become embedded in market behaviour.”

A voting member who was willing to dissent in July, wait in October, and then renew calls in November for “at least two” hikes, potentially at a faster pace, sends a stronger signal than an official who has consistently called for higher rates. Her call for hikes reflects her assessment that the data now warrant action, rather than a fixed policy stance.

However, after calling for “at least two more” hikes, she immediately outlined the conditions for a pause: “After completing these two rate hikes, I believe it would be appropriate to pause, assess economic and financial conditions, and then determine whether further action is needed.”

A “pause” does not mean the hiking cycle is “over.” She framed two hikes as the point at which policymakers could stop to assess conditions, rather than the endpoint of tightening. This wording differs fundamentally from the concept of a “terminal rate”: she specified a minimum number of policy moves rather than a particular interest rate level, with any further action dependent on the data.

She also offered a more urgent argument: “More restrictive monetary policy is needed to appropriately balance the outlook and risks for inflation and employment, and that balance needs to be achieved as soon as possible.” The phrase “as soon as possible” is consistent with her suggestion that the pace could accelerate this winter. Logan’s logic is to reach a sufficiently restrictive position before inflation expectations become entrenched, rather than gradually raising rates towards a predetermined level.

Echoing Waller on the Same Day: Two Paths, One Direction

On the same day Logan spoke, Fed Governor Christopher Waller delivered a message with a different structure but the same direction. Waller’s baseline scenario is a 25-basis-point hike in December. However, he added a condition: if inflation data exceed expectations, as that day’s CPI release did, the Fed may need to raise rates by 50 basis points. His central argument concerned policy credibility: “If a rate hike already priced in by markets fails to materialise, markets will immediately scale back expectations for further hikes, real interest rates will decline, and monetary policy will experience an unintended easing.”

Logan’s path is “at least two hikes, potentially at a faster pace this winter.” Waller’s is “at least 25 basis points in December, with 50 if inflation exceeds expectations.” The distinction lies in how they specify future action: Logan set a minimum number of hikes, while Waller outlined how the size of a single hike could vary depending on inflation. Their underlying assessment, however, is the same: the current policy rate is insufficient to return inflation to target, and the cost of waiting exceeds the cost of acting.

This stands in clear contrast to Chair Warsh’s approach. Warsh has declined to provide advance guidance on the rate path or commit to the size of a December hike. His communication strategy favours less explicit forward guidance while preserving policy flexibility. On the same day, Logan and Waller filled the information gap left by Warsh in two different ways.

Market Reaction

The day before Logan’s remarks, markets had already undergone a round of hawkish repricing. On November 10, following stronger-than-expected October CPI data, CME FedWatch showed that the probability of a 50-basis-point December hike had risen from 0% the previous day to 15.3%. The probability of a 25-basis-point hike stood at 84.7%, bringing the overall likelihood of a December rate increase to 100%. A week earlier, the probability of a 25-basis-point December hike was around 95.6%, while the likelihood of rates remaining unchanged was still 4.4%.

CPI was not the only factor supporting this repricing. The October nonfarm payrolls report, released on November 6, showed an increase of 165,000 jobs, far above market expectations of around 70,000. Employment figures for August and September were revised up by a combined 84,000. The unemployment rate fell from 4.18% to 4.14%, while the labour force participation rate rose for a third consecutive month to 61.9%. Guotai Haitong’s assessment was that the employment report “weakened the case for the Fed to remain on hold because of a slowing labour market.” Meanwhile, September core PCE inflation remained at 3.1% year on year, above the 2% target.

The market’s “100% probability in December” means a December hike is now being treated as the baseline scenario. The key uncertainties have shifted to two questions: whether December’s increase will be 25 or 50 basis points, and whether another hike will follow. Logan’s call for “at least two” addresses the second question.