Fed’s Bowman suggests further interest-rate hikes if US inflation improves

“We should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled,” per Federal Reserve (Fed) Governor Michelle Bowman’s remarks prepared for delivery to the Kansas Bankers Association, released Saturday, per Reuters.

Further, the policymaker praised the latest decline in the core inflation while also defending the hawkish Fed bias by stating that, “inflation remains well above target”.

Fed’s Bowman also cited the need for consistent evidence that inflation is on a meaningful path down toward our 2% goal to determine the strength of rate hikes, as well as the duration for holding rates intact at the higher levels.

Apart from inflation, the softer consumer spending and easing labor market crunch were also cited as welcome catalysts by Fed’s Bowman.

Fed’s Bowman didn’t seem any sharp contraction in the US credit conditions after March’s banking turmoil.

Market reaction

The hawkish comments allowed EUR/USD to begin the week on a back foot around 1.1000, down 0.05% intraday, after falling in the last three consecutive weeks.