Dallas Federal Reserve Bank President Lorie Logan said Friday that the U.S. Treasury market is functioning well even with substantial interest-rate swings, while urging the Federal Open Market Committee to strengthen tools that support market functioning without extra economic stimulus^1,2.

Logan spoke at a Dallas Fed conference on bank funding organized with the Boston Fed, according to her prepared remarks posted by the Dallas Fed². Reuters reported the same appearance¹.

She said trading has proceeded smoothly amid rate volatility and that the Fed should intervene only in extreme cases of severe dysfunction, not merely low liquidity². She described the Treasury market as the foundation of U.S. and global finance and said severe breakdowns could impede credit and the Fed's dual mandate².

Logan said inflation is currently trending too high and that policy needs to become more restrictive, not less, citing remarks she gave earlier in the week². In that setting, she said, asset purchases could no longer easily serve both liquidity support and accommodation if dysfunction appeared².

She argued lending tools are easier to separate from the policy stance than large-scale purchases, and that purchases, if used, could be held in a separate account with a commitment to sell them as soon as possible². She also said the Fed should extend discount-window operations to weekends and holidays, develop the ability to centrally clear repo operations, and be operationally ready to lend to designated financial market utilities in extreme cases².

Logan said banks have improved their readiness to tap contingent funding since 2023 stresses, including documentation, collateral positioning and test loans at the discount window². She said 47 depository institutions are now counterparties to the Fed's standing repurchase operations².

The remarks were her own views, not necessarily those of her Fed colleagues, the Dallas Fed text said².