On Monday, Federal Reserve Governor Bowman stated at the 2025 American Bankers Association (ABA) Community Bankers Conference that the Federal Reserve needs to establish greater confidence in the continued decline of inflation before deciding to cut interest rates, while closely monitoring the uncertainty brought by the Trump administration's trade policies on the economic outlook. Inflation Trends Easing, but Upside Risks Remain The Federal Reserve currently maintains the benchmark interest rate in the range of 4.25% to 4.5%. Bowman pointed out that this level is "in a good position," allowing policymakers to remain patient and closely monitor changes in inflation data. Bowman is one of the officials appointed by Trump during his first term, and within the Federal Reserve, she has consistently held the most hawkish stance on inflation issues. Despite core inflation indicators remaining high, Bowman believes that inflation seems to have resumed a downward trend, her baseline expectation is for further easing this year. The previously released January core CPI showed a year-on-year increase of 3.3%, still above the Federal Reserve's target level. Meanwhile, PPI data remains above expectations, but due to the soft PCE component data within the PPI, the market generally expects that the Federal Reserve's preferred measure of inflation—the Personal Consumption Expenditures (PCE) price index (excluding food and energy costs)—is expected to drop from 2.8% in December of last year to 2.6% in January of this year. This expectation is favorable for interest rate cuts, but the market still anticipates that the Federal Reserve will keep the benchmark interest rate unchanged at the upcoming March meeting. However, Bowman also warned that there are still upside risks to the inflation path, pointing out that the process of returning inflation to the 2% target remains slow and uneven. Bowman stated: "We need to continue to monitor inflation and further efforts are needed to bring inflation closer to the 2% target. Before cutting rates again, I want to establish greater confidence in the continued decline of inflation." She also noted that the currently expected inflation rate is still above the Federal Reserve's 2% target, while the current unemployment rate of 4% is below her estimate of full employment, and wage growth is still faster than what the Federal Reserve's inflation target can tolerate. Attention to Economic Uncertainty from Trump Administration's Trade Policies Bowman also considered the uncertainty that new government policies may bring. Since officially taking office for his second term last month, Trump has issued a series of executive orders regarding trade and tariffs, but in some cases has rescinded certain tariffs. Bowman mentioned in her speech: "The decision to keep interest rates unchanged currently also provides us with the opportunity to further examine economic data and gain a clearer understanding of government policies and their impact on the economy. It will be particularly important to gain a deeper understanding of these policies, how they are specifically implemented, and to more accurately assess the economy's response in the coming weeks and months." Regarding the future policy path, Bowman stated that in the process of transitioning the federal funds rate towards a more neutral policy stance, we have entered a new phase with several factors prompting me to lean towards a cautious and gradual approach to policy adjustments, as this allows us time to assess progress in achieving inflation and employment goals. She also specifically mentioned that given the current policy stance, the looser financial environment resulting from the stock market's rise over the past year may slow the process of declining inflation Bowman Warns: Bank "Regulatory Inaction" is Worrisome In addition to discussions on monetary policy, Bowman also criticized the current U.S. banking regulatory system, emphasizing the need for greater transparency in the banking regulatory process and noting that the existing system has numerous issues that urgently need updating. She stated, "Greater flexibility in the regulatory process may lead to adverse outcomes, primarily stemming from regulators' tendency to use inaction and opacity as regulatory tools. This is inappropriate and must be subject to proper scrutiny, or even completely discarded." Bowman pointed out that several areas need review, including regulation, the bank application process, and related laws. On specific issues, Bowman questioned whether the current regulatory focus is reasonable, whether it overlooks core financial risks, and whether it is overly focused on non-core and non-financial risks (such as IT, operational risk, management, risk control, internal control, and corporate governance). Bowman stated that regulatory agencies need to comprehensively reassess the entire banking regulatory system and consider "which aspects are effective, which aspects have issues, and which need updating." Currently, when banks submit applications (such as for new bank establishment or mergers), the feedback from regulatory agencies is often unclear or delayed, leading to obstacles for banks during the application process. Bowman mentioned the problems in the bank application process, stating that regulatory agencies have a responsibility to provide clear responses when banks request feedback and provide information in good faith. Bowman also suggested that the Federal Reserve establish a dedicated resource or team to assist new bank applicants. This "dedicated resource" could provide guidance before banks formally submit applications, helping them find viable paths. She also noted that this idea is not only applicable to new bank establishment applications but that bank merger applications face similar issues. She emphasized, "In my view, a lengthy application approval process is akin to a form of regulatory 'inaction,' and this situation must be eliminated."