Federal Reserve Governor Michelle Bowman stated that interest rates may need to increase to control inflation, contrary to expectations of rate cuts. She highlighted potential risks to inflation and cautioned against easing policy too quickly. Bowman, known for her hawkish views, emphasized the importance of carefully monitoring inflation and not rushing to reduce rates. While she acknowledged the possibility of lowering rates in the future, she stressed the need to be vigilant about inflation risks. The speech, delivered to the Shadow Open Market Committee, comes amid uncertainty about the Fed’s policy direction. Market expectations and comments from other officials, such as Chair Jerome Powell, suggest a cautious approach to rate cuts. Futures traders predict three cuts this year, but the timing remains uncertain. Bowman underscored the need for data-driven decisions and a cautious approach to monetary policy in light of inflation risks and other economic factors. She will closely monitor inflation data and economic indicators to assess the appropriate path of monetary policy. Fed officials will receive the latest inflation data when the Labor Department releases the March consumer price index report.
Federal Reserve Governor Michelle Bowman recently spoke at a “Fed Listens” event, where she suggested that interest rates may need to increase to control inflation, contrary to the expected rate cuts. Bowman emphasized the need for a cautious approach to policy changes, noting potential risks that could lead to higher inflation. While she believes it may eventually be appropriate to lower rates, she sees several factors that could push inflation higher. Market uncertainty about Fed policy has led to conflicting views among officials, with some indicating a more cautious approach to rate cuts. Bowman highlighted concerns about supply-side improvements, geopolitical risks, fiscal stimulus, and labor market tightness as potential drivers of inflation. Fed officials will continue to monitor economic data closely as they assess the appropriate path of monetary policy.
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