Logan Says Fed Should Consider Replacing Its Benchmark Rate (2)

Federal Reserve Bank of Dallas President Lorie Logan said the US central bank should abandon the federal funds rate as its benchmark in implementing monetary policy, and consider an overnight rate tied to the more robust market for loans collateralized by US Treasuries.

“The time has come for the FOMC to prepare to target a different short-term interest rate,” Logan said Thursday in prepared remarks for an event at the Richmond Fed, referring to the Fed’s policy-setting Federal Open Market Committee.

Logan argued the fed funds target is outdated, and connections between the little-used interbank market and overnight money ...