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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.