Fed Director Bowman: If inflation does not cool, support to continue to sharply raise interest rates | Anue Juheng-US Equities

US Federal Reserve (Fed) Governor Bowman (Michelle Bowman) said Wednesday (12) that if inflation shows no signs of easing, it will support more substantial rate hikes.

Bowman said the Fed’s next move hinges on inflation trends. If there are no signs of a decline, it should continue to retain the ability to raise interest rates significantly, but if inflation begins to cool, it will make sense to slow down the pace of interest rate increases.

Bowman, however, still sees no possibility of a rate cut, reiterating the need to raise rates to restrictive levels for some time to cool inflation. It is unclear how long the high rates should be raised and how long the restrictive policy should be maintained.

The United States will announce the latest consumer price index (CPI) ahead of the US stock market opening on Thursday the 13th. After the 8.3% annual increase in August, the market expects the annual growth rate of the ‘CPI will hit 8.1% in September and the main CPI is expected to hit a 40-year high again.

Fed minutes released Wednesday showed officials believed insufficient action would be more costly than excessive action in fighting inflation, although the record also featured discussions about adjusting the pace of rate hikes. It showed that officials still wanted to curb inflation without triggering a recession.

Fed officials expect the federal funds rate to hit 4.4% by the end of this year and 4.6% next year, according to a dot chart released last month.

Bowman also touched the boundaries of forward guidance, arguing that providing forward guidance is now less beneficial than it was in a period of zero interest rates and that policy flexibility has become crucial in a perspective fraught with high levels of uncertainty.

He believes that providing clear forward-looking guidance could reduce the committee’s flexibility in dealing with unforeseen economic conditions. keep up with changes in your political position in communicating your political position.