Federal Reserve Governor Bowman: Hope to see more progress on inflation before interest rate cuts
Federal Reserve Governor Bowman stated that she hopes to see more progress on inflation issues before further interest rate cuts. She believes that despite a strong economy, there are still upward risks to inflation, and price stability is more concerning than the labor market. Bowman mentioned that the current policy setting provides an opportunity to review economic activity and emphasized the importance of awareness regarding policy implementation. She tends to favor a cautious and gradual approach to adjusting policies and is focused on the rise in long-term U.S. Treasury yields
According to the Zhitong Finance APP, Federal Reserve Governor Bowman stated that she hopes to see more progress on inflation issues before the Federal Reserve further cuts interest rates, and questioned what restrictive policies could be implemented given the strong economy.
On Friday, Bowman said, "Before making further adjustments to interest rates, I want to see progress in reducing inflation." She indicated that she does believe inflation will further slow down this year, but the process may be "bumpy." Nevertheless, she still sees upward risks to inflation and pointed out that current price stability is a more concerning issue than the labor market.
Bowman stated, "Given the economy's continued strength and the significant rise in stock prices compared to a year ago, the overall level of interest rates and borrowing costs seems unlikely to have a meaningful restraining effect." It is worth mentioning that this statement appears to contradict Federal Reserve Chairman Powell's description of the policy as "meaningfully restrictive."
Bowman did not mention U.S. President Trump in her remarks, but she stated that the current policy setting "also provides an opportunity to further review economic activity indicators and clarify government policies and their impact on the economy." She added, "In addition to having greater confidence in how the economy will respond, it is also very important to have a better understanding of actual policies and how they are implemented."
Additionally, Bowman noted that she is closely monitoring the rise in long-term U.S. Treasury yields, as there are concerns that tightening policies may be needed to curb prices. Bowman prefers a "cautious and gradual" approach to adjusting policies. She stated, "I remain concerned that the relatively loose financial environment over the past year may lead to a lack of further progress in slowing inflation."