Federal Reserve Bank Governor Michelle Bowman delivers her first public remarks as a Federal policymaker at the American Bankers Association conference in San Diego, California, May 11 2, 2019.
Ann Saphir | Reuters
Federal Reserve Governor Michelle Bowman said on Saturday she supports the central bank’s recent major interest rate hikes and thinks they are likely to continue until inflation eases.
The Fed, in its last two policy meetings, increase interest rates on standard loans rose 0.75 percentage points, the biggest increase since 1994. Those moves to reduce inflation are at their highest level in more than 40 years.
In addition to the price hike, the Federal Open Market Committee that fixes the rate indicated that “continuous increases … would be appropriate,” a view Bowman said she endorsed.
“My view is that similar sized increases should be on the table until we see a consistent, meaningful and long-term decrease in inflation,” she added in prepared statements. in Colorado for the Kansas Bankers Association.
Bowman’s comments are the first from a member of the Board of Governors since the FOMC last week approved the latest rate hike. Over the past week, many regional presidents have said they also expect the rate to continue to rise strong until inflation falls from the current 9.1% annual rate.
Next Friday’s jobs reportshowed 528,000 positions added in July and workers’ wages up 5.2% year over year, both higher than expected, markets are pricing in a 68% chance of a third consecutive 0.75 percentage points at the next FOMC meeting in September, according to CME . group data.
Bowman said she will be watching Upcoming inflation data closely to gauge exactly how much she thinks rates should be increased. However, she said recent data is casting doubt on hopes that inflation has peaked.
“I have seen few, if any, concrete signs to support this expectation and I will need to see clear evidence of this decline before incorporating easing in inflationary pressures into my outlook.” myself,” she said.
Furthermore, Bowman said she sees “a significant risk of high inflation next year for essential needs including food, housing, fuel and vehicles.”
Her comments come after other data showed US economic growth measured in GDP declines for two consecutive quarterss, meets a common definition of recession. While she said she expects growth in the second half of the year and “moderate growth in 2023,” inflation remains the biggest threat.
“The bigger threat to a strong labor market is excessive inflation, which, if allowed to continue, could lead to a further recession, potentially prolonging the period of economic weakness along with Inflation is high, as we did in the 1970s. In any case, we must deliver on our commitment to reducing inflation, and I will remain steadfastly focused on this task,” Bowman said.