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| The Fed may need another interest rate hike to curb inflation. (Source: Reuters) |
In her prepared remarks for the Community Banking Leaders Conference of the South Carolina Association of Banking Leaders, Ms. Bowman emphasized: "My view has changed considering the possibility that inflation could fall further with policy interest rates remaining at their current levels for some time longer."
This statement marks a shift in Bowman's stance, as she has long advocated for tighter monetary policy.
Previously, the official suggested that the Fed might need another interest rate hike to curb inflation. The personal consumption expenditures (PCE) index, the Fed's preferred measure of inflation, has fallen from a 40-year high in 2022 to around 2.6% as of November 2023.
According to Ms. Bowman, if inflation continues to approach the Fed's 2% target, that would be the appropriate time for the central bank to begin lowering interest rates so that monetary policy does not become too restrictive for the economy.
Last month, the Fed kept interest rates unchanged in the 5.25-5.5% range, a level that has been maintained since July of last year.
The bank also signaled that it may lower interest rates this year.
According to the minutes of the December 12-13 meeting, Fed officials debated monetary policy adjustments amid concerns about how long the economy could sustain high interest rates and when to stop shrinking the balance sheet.
Fed Chairman Jerome Powell emphasized that the central bank may have completed raising interest rates and expects to begin lowering them by the end of 2024.
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