Logan Ushers in New Era of Debate on Fed’s Key Policy Tool

A Federal Reserve official surprised Wall Street last week when she proposed the US central bank abandon the benchmark that’s served as its main policy tool for decades.

What was striking wasn’t the idea itself — market participants have argued for years that policymakers should move away from the federal funds rate and the moribund market that underlies it. The surprise was that it came from the president of the Dallas Fed rather than New York — the regional bank responsible for implementing the Fed’s policy moves. Moreover, it was quickly taken as a signal the Fed might be poised to move on this soon.