Dallas Federal Reserve President Lorie Logan said on Friday the U.S. government bond market remains vulnerable to significant shocks that could cause broader damage, adding that government authorities must push ahead with efforts to shore up the financial system.
Logan, who holds a vote in this year's Federal Open Market Committee monetary policy meetings, did not comment on the outlook for monetary policy and the economy in her prepared remarks.
Those anxieties have been heightened by the aggressive Fed rate increases that are aimed at reducing high levels of inflation. Those increases in borrowing costs coupled with the central bank's ongoing efforts to shed bonds to reduce its market footprint, have raised questions about what authorities might do to support markets in the future.
"Against the backdrop of a weaker economic outlook, higher interest rates, and elevated uncertainty over the second half of the year, financial vulnerabilities remain moderate overall," the Fed said in the report, adding that, for now, the financial system remains flush with cash.
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