Fed’s Bowman: I remain willing to support rate hikes if progress on inflation stalls
28.11.2023, 16:00

Fed’s Bowman: I remain willing to support rate hikes if progress on inflation stalls

Federal Reserve (Fed) Governor Michelle Bowman said on Tuesday that she remains willing to support raising interest rates “should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation down to 2 percent in a timely way.” 

In a speech delivered at the Utah Bankers Association and Salt Lake City Chamber Banker and Business Leader Breakfast, Bowman explained that is is possible that the fed funds rate will need to be at a higher level than before the COVID-19 pandemic, to foster low, stable inflation. 

Key takeaways from the speech: 

Finally, given all of the considerations I have just discussed, it is not yet clear whether the appropriate level of the federal funds rate will need to remain at a higher level than before the pandemic in order to effectively foster low and stable inflation and support full employment. 

 I continue to see an unusually high level of uncertainty as I consider current economic conditions and my own views on the outlook for the economy and monetary policy. My colleagues and I will continue to make our monetary policy decisions at each meeting based on the incoming data and the implications for the economic outlook. 

I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation down to 2 percent in a timely way.

We should keep in mind the historical lessons and risks associated with prematurely declaring victory in the fight against inflation, including the risk that inflation may settle at a level above our 2 percent target without further policy tightening. 

Market reaction

The US Dollar Index (DXY) moved modestly off lows, but remains under 103.00, on its way to the weakest daily close in months. US yields are sharply lower, affected by comments from Fed’s Waller. 

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