Federal Reserve's Logan: Suggests FOMC replace federal funds rate with SOFR rate

Lorie Logan, President of the Federal Reserve Bank of Dallas: It is time to prepare for the new benchmark interest rate.

Replacement options include tri-party general collateral repo rates and SOFR (Secured Overnight Financing Rate) rates.

This will not interfere with the FOMC's monetary policy.

Currently, the federal funds rate remains a reliable (monetary policy) target.

The money market has changed, and the Federal Reserve's federal funds rate target has become outdated.

The connection to the federal funds rate is weak and may suddenly break.

Upgrading (inflation) targets will not interfere with the balance sheet