Fed’s Bowman underlines priority on price stability

Fed Governor Michelle Bowman noted during a Saturday event that her “baseline” expectation is for inflation to decline further under the current policy stance. She added that if incoming data shows inflation moving sustainably toward the 2% target, it could become appropriate to “gradually lower the federal funds rate.” This would prevent monetary policy from becoming “overly restrictive” on economic activity and employment.

However, Bowman stressed that monetary policy is “not on a preset course,” with decisions to be guided by data. By the time of Fed’s September meeting, the committee will have additional economic data, including one employment and two inflation reports, as well as a broader view of financial conditions.

She acknowledged that while equity prices have been “volatile” recently, they remain “still higher than at the end of last year,” indicating resilience in financial markets.

Despite some progress, Bowman expressed concerns that inflation remains “somewhat elevated” with “some upside risks.” She emphasized the need to “pay close attention to the price-stability side of our mandate,” while also monitoring for any significant weakening in the labor market.

Full remarks of Fed’s Bowman here.