"Gradual policy adjustments can be helpful," Logan said at an Atlanta Fed economic conference.

While not commenting on an upcoming Fed decision on whether to raise rates an 11th straight time, Logan said that "financial conditions can sometimes deteriorate nonlinearly, doing damage to the broader economy, but the risk of a nonlinear reaction can be mitigated by raising interest rates in smaller, less frequent steps."

Logan's remarks, introducing a discussion among economists about how to tighten monetary policy without undue financial stress, point to the ongoing influence of recent bank failures on the Fed's policy discussion.

Policymakers have expressed relief that deposit outflows from the banking system stabilized quickly after the March 10 failure of Silicon Valley Bank raised the risks of further bank runs.

But the collapse of SVB and a handful of other regional banks also made policymakers more cautious after they raised the benchmark policy rate by 5 percentage points in a little over a year, the fastest pace since the 1980s.

Logan said it may be possible to pull the levers of monetary policy in ways designed to protect financial stability.

"The restrictiveness of monetary policy comes from the entire policy strategy - how fast rates rise, the level they reach, the time spent at that level and the factors that determine further increases or decreases," Logan said.

While the Fed has scaled back to quarter point rate increases after moving rates over the past year by as much as three quarters of a point at a time, officials continue to debate if rates have gone as high as needed to cool inflation, and will have ongoing discussions about how long rates need to remain high.

"These levers can conceivably be arranged to maintain the restrictiveness of policy while reducing financial stability side effects," Logan said.