Federal Reserve Governor Michelle Bowman Comments on Housing Market’s Effect on Inflation

Investing.com – Federal Reserve Governor Michelle Bowman said on Wednesday that an apparent recovery in the housing market could affect the fight against inflation.

“We expect that lower rents will eventually be reflected in the inflation data,” provided housing and rent prices decline, Bowman said in prepared remarks for a Boston Fed Listens community event focused on the labor and housing market.

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Monetary policy makers at the Fed have said for several months that they are counting on lower rental rates to eventually bring down key inflation figures, as rents are factored into the data using an annual average.

Bowman, who was among the Fed’s more hawkish officials, did not say how the housing rebound might affect the Fed’s decision to raise interest rates at its June 13-14 meeting. However, this indicates that there are doubts among Fed officials about the slow pace of inflation, and therefore the continuation of raising interest rates.

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When the Fed began signaling that it would raise interest rates in the fall of 2021, and then followed it up with an aggressive rate-raising cycle that began in March of the following year, home mortgage rates also climbed, and slower sales and lower prices followed.

But that process may have bottomed out, with the S&P CoreLogic Case-Shiller National Home Price Index rising in February and March month over month.

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