Federal Reserve Governor Michelle Bowman has stated that the US central bank may need to raise interest rates further in order to fully restore price stability. Bowman made these comments at an event with the Kansas Bankers Association in Colorado on Saturday. She expressed her support for the decision to raise rates at the Fed’s meeting last month but emphasized the need for additional rate increases to bring inflation down to the Federal Open Market Committee’s (FOMC) target of 2%.
While there has been a slowdown in price growth, Bowman stated that she wants to see consistent evidence of sustained disinflation before considering further rate increases. She also mentioned that she will be monitoring consumer spending and labor market conditions for signs of slowing.
The Federal Reserve raised the federal funds rate to a range of 5.25% to 5.5% in July, the highest level in 22 years. The median estimate of Fed officials’ most recent quarterly projections showed two more rate increases this year. Bowman highlighted that policymakers will assess incoming data and be willing to raise rates in the future if inflation progress stalls.
In response to a Bureau of Labor Statistics report showing slower-than-expected employment gains and a drop in the unemployment rate to 3.5%, two Fed officials suggested that the labor market is coming into better balance. They argued that the central bank may soon need to consider how long to hold interest rates at elevated levels.
Atlanta Fed President Raphael Bostic stated that he is comfortable with the pace of the economy’s slowdown and does not see a need for additional rate hikes. Chicago Fed President Austan Goolsbee emphasized the need for patience during the disinflation process and expressed hope that the central bank can bring inflation down to its 2% target without causing a recession. He mentioned that policymakers will soon need to start thinking about when to hold interest rates steady and for how long.
The Federal Reserve has three more policy meetings in 2023, with the next meeting scheduled for September.
How do Atlanta Fed President Raphael Bostic and Chicago Fed President Austan Goolsbee differ in their views on the need for additional rate hikes and patience in the disinflation process
Federal Reserve Governor Michelle Bowman recently spoke at an event with the Kansas Bankers Association, where she highlighted the potential need for further interest rate increases to restore price stability in the US. While Bowman commended the decision to raise rates at the Fed’s recent meeting, she emphasized the importance of additional rate hikes to bring inflation down to the Federal Open Market Committee’s target of 2%.
While there has been a slowdown in price growth, Bowman emphasized the need for sustained evidence of disinflation before considering further rate increases. She mentioned that monitoring consumer spending and labor market conditions will be crucial in determining if further rate hikes are necessary.
In July, the Federal Reserve raised the federal funds rate to its highest level in 22 years. According to Fed officials’ projections, there may be two more rate increases this year. Bowman emphasized that policymakers will carefully assess incoming data and be prepared to raise rates if progress towards the inflation target stalls.
A recent Bureau of Labor Statistics report showed slower-than-expected employment gains and a drop in the unemployment rate to 3.5%. This prompted two Fed officials to suggest that the labor market is reaching a better balance. They argued that the central bank may need to consider how long to maintain elevated interest rates.
Atlanta Fed President Raphael Bostic indicated that he is comfortable with the pace of the economy’s slowdown and sees no need for additional rate hikes. On the other hand, Chicago Fed President Austan Goolsbee stressed the importance of patience during the disinflation process and expressed hopes that inflation can be brought down to the 2% target without triggering a recession. He mentioned that policymakers will soon need to discuss when to hold interest rates steady and for how long.
The Federal Reserve has three more policy meetings scheduled for 2023, with the next one set for September.
