Federal Reserve Governor Michelle Bowman said the US central bank should keep raising interest rates to reduce inflation which remains “much too high.”
(Bloomberg) — Federal Reserve Governor Michelle Bowman said the US central bank should keep raising interest rates to reduce inflation which remains “much too high.”
“I don’t think we’re seeing what we need to be seeing, especially with inflation,” Bowman said Friday at a Tennessee Bankers Association Credit Conference in Nashville. “I think we’ll have to continue to raise the federal funds rate until we start to see a lot more progress on that.”
Bowman’s comments echo that of other Fed officials this week, who said the central bank may need to raise interest rates more than previously thought to cool persistent high inflation.
A report Thursday showed that a gauge of wholesale prices rose in January by the most since June. It followed data earlier this week showing consumer inflation that was still elevated last month.
The Fed raised rates by a quarter of a percentage point at their meeting earlier this month, to a range of 4.5% to 4.75%. It was a further slowdown from a 50 basis-point hike in December, which followed four consecutive jumbo-sized 75 basis point raises last year.
Officials have said the slower pace will allow them to better assess how monetary policy is working its way through the economy. Banks and traders on Wall Street increased their bets for more hikes from the Fed and now see rate increases at the March, May and June meetings.
“I don’t think anyone can argue that inflation is much too high,” Bowman said. “I think we’re seeing a lot of really inconsistent data in the economic conditions.”
Asked what she would need to see to favor pausing the tightening campaign, Bowman said it would be “a consistent decline in inflation,” while the evidence suggests that the rate increases so far were not yet slowing the economy and borrowing costs had not yet reached a sufficiently restrictive level.
“We’re not finished yet. We haven’t beaten inflation,” she said, without providing further clues on how high she favors going or whether the Fed should revert to larger rate moves to reach that destination.
(Updates with more Bowman comment in final two paragraphs)
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