Overview

• In a speech at the Richmond Fed, Lorie Logan said the FOMC should prepare to manage liquidity to control the tri‑party general collateral rate because that market is more active.
• She warned the federal funds market has dried up, leaving its link to broader monetary conditions fragile and at risk of breaking suddenly.
• Logan argued TGCR is the best candidate since it can be guided with the current toolkit, with tolerance for modest day‑to‑day rate moves rather than pinpoint control.
• She advised that any retargeting should be preannounced and implemented when markets are functioning smoothly to avoid disruption.
• Her proposal comes as the Fed operates a 4.00%–4.25% policy range and confronts expected month‑end liquidity tightness and ongoing balance‑sheet runoff that could test money markets.