Fed Governor Bowman sees ‘similarly sized’ rate hikes ahead after three-quarter point moves

Michelle Bowman, Federal Reserve Bank Governor gives her first public comments as a Federal Policymaker during an American Bankers Association conference in San Diego (California), February 11, 2019.
Ann Saphir | Reuters

Michelle Bowman, Federal Reserve Governor, stated Saturday that she supported the recent large interest rate hikes by the central bank and believes they will continue until inflation subdues.

The Fed at its final two policy meeting. raised benchmark borrowing ratesThis is the biggest increase in inflation since 1994, at 0.75 percent. These measures were taken to reduce inflation, which is at its highest in 40 years.

Bowman supported the viewpoint that the Federal Open Market Committee which rates the economy indicated that the increase was not the only thing to be done.

She stated that she believes similar-sized inflation increases are necessary until we witness the decline of inflation in a consistent and meaningful way.

Bowman’s comment is the first made by a Board member since the FOMC approved last week the rate rise. The past week has seen multiple regional presidents say they also expect rates to continue to riseTo reduce inflation to below its 9.1% annual rate, we must act quickly.

The following are some examples Friday’s jobs reportAccording to Reuters, the market was pricing in an 68% probability of another 0.75 percentage point increase at the September FOMC meeting. CME Group data.

Bowman indicated that Bowman will be keeping an eye on the situation upcoming inflation dataTo determine exactly how much rates should increase, she will be watching closely. She said that recent data was casting doubts on the possibility of inflation peaking.

“I have not yet seen concrete indicators that support my expectation. I need unambiguous evidence to confirm this decrease before I consider easing inflation pressures in my outlook,” she stated.

Bowman stated that she believes there is a risk of inflation in the next year, for essentials such as food, fuel and vehicles.

She made these comments after reviewing other data indicating that the U.S. has seen an increase in its economic growth measured by GDP contracted for two straight quarterS, which is a definition of recession. Although she stated that second-half growth will pick up and 2023 will see moderate growth, the most serious threat to inflation is still present.

Excessive inflation is the greatest threat to our strong labor market. It could lead to further economic weakening and high inflation. We have seen this before in the 1970s. Bowman declared that in any event, it is essential to keep our promises of decreasing inflation.

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