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Fed's Bowman: Still sees upside inflation risks, willing to raise rates if progress stalls
Federal Reserve (Fed) Board of Governors member Michelle W. Bowman cautioned that there is a real risk that inflation could remain elevated for much longer than many are anticipating. Fed Board member Bowman outlined a far more cautious approach to the Fed's current inflation outlook during a speech at the Massachusetts Bankers Association Annual Convention in Key Biscayne.
Key highlights:
- It remains unclear whether further supply-side improvements will continue to lower inflation.
- Monetary policy appears to be restrictive.
- Bowman sees several upside inflation risks in outlook.
- Continues to hold that inflation should slowly move lower as long as policy holds.
- Remains willing to raise rates further if data shows inflation progress has stalled or reversed.
- Expects inflation to remain elevated for some time.
- The extent of data revisions in the past few years makes assessing the economy even more challenging.
- Geopolitical developments remain a key upside risk to inflation.
- Too-loose financial conditions remains a risk, fiscal stimulus could drive demand higher, stalling or even reversing inflation progress.
- There remains a high risk that consumer, more immigration, and tight labor market conditions could lead to persistently high inflation.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
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