Fed’s Bowman cites multiple risks to inflation, rules out rate cuts for now

In a speech overnight, Fed Governor Michelle Bowman reiterated that Fed is “still not yet at the point where it is appropriate to lower the policy rate.” She emphasized that several upside risks to inflation persist, making it premature to consider rate cuts.

Bowman highlighted several concerns impacting inflation. She noted that further improvements on the supply side are unlikely, and geopolitical developments could disrupt global supply chains, adding to inflationary pressures. Additionally, loosening in financial conditions might increase demand, potentially stalling disinflation progress. Furthermore, increased immigration and continued labor market tightness could lead to persistently high core services inflation.

Bowman stressed that monetary policy is “not on a preset course.” She remains willing to raise interest rates if incoming data suggest that progress on inflation has stalled or reversed.

Full speech of Fed’s Bowman here.