- ORIGINAL NEWS
Fed Governor Bowman says additional rate hike could be needed if inflation stays high
- SUMMARY
While the Federal Reserve is considering interest rate cuts to combat inflation, Governor Michelle Bowman believes it may be necessary to raise rates instead.
She cites potential upside risks, including supply chain issues, geopolitical turmoil, fiscal stimulus, and persistent inflation in core services.
Bowman, a voting member of the rate-setting Federal Open Market Committee, sees markets expecting the central bank to cut rates.
However, she cautions that “reducing our policy rate too soon or too quickly could result in a rebound in inflation.”
Despite her preference for cautious monetary policy, Bowman acknowledges that rate cuts may be necessary eventually.
Nevertheless, she stresses the need to closely monitor data and inflation risks.
Inflation reports over the past couple of months suggest uneven or slower progress, particularly in core services, which excludes volatile items like food and energy.
Bowman’s comments come amid a cautious approach from Fed officials, including Chairman Jerome Powell.
Other Fed presidents, such as Raphael Bostic and Neel Kashkari, have indicated a limited number of rate cuts this year or even the possibility of none if inflation doesn’t decelerate further.
As the Federal Reserve weighs the complex economic outlook, Bowman emphasizes the importance of watching data closely and remaining cautious in future policy decisions.
She acknowledges the risks to inflation and the need to avoid a situation where inflation rebounds, requiring further tightening.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“Bowman said her most likely outcome remains that “it will eventually become appropriate to lower” rates.”
Negative
“Bowman said policymakers need to be careful not to ease policy too quickly.”
“Noting a number of potential upside risks to inflation, Bowman said policymakers need to be careful not to ease policy too quickly.”