Fed’s Bowman: Further 75 basis point hikes should be on the table


U.S. Federal Reserve Governor Michelle Bowman delivers her first public remarks as a Fed policymaker at an American Bankers Association conference in San Diego, California, U.S., February 11, 2019. REUTERS /Ann Saphir/File Photo

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Aug 6 (Reuters) – The U.S. Federal Reserve is expected to consider further interest rate hikes of 75 basis points in upcoming meetings to bring elevated inflation back to the central bank’s target, the Bank said on Saturday. Fed Governor Michelle Bowman.

“I supported the FOMC’s decision last week to raise the federal funds rate an additional 75 basis points,” Bowman said in prepared remarks at a Kansas Bankers Association event in Colorado, referring the Federal Open Market Committee, which defines monetary policy. “My view is that increases of a similar size should be on the table until we see inflation come down consistently, significantly and sustainably.”

A procession of policymakers this week showed a growing determination to continue aggressive monetary tightening, with almost all of them making it clear that the central bank remains determined to continue with rate hikes until it sees evidence. strong and enduring that inflation is on track to return to the Fed’s 2% target. Read more

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Fed Chairman Jerome Powell previously signaled last week that the central bank could consider another “unusually large” rate hike at the September 20-21 meeting, seen as a decision between a 50-point move. basis or 75 basis points, with officials guided in their decision-making by a ream of critical data points covering inflation, employment, consumer spending and economic growth by then.

Inflation has for months defied expectations that it will subside and now stands, by the Fed’s preferred measure, at more than three times the target.

The Fed is under renewed pressure to deliver another 75 basis point interest rate hike at its next meeting next month as new data on Friday showed an unexpected acceleration in job gains despite soaring inflation and rising borrowing costs. Read more

Bowman added that she always keeps an open mind about the size of the hikes depending on the evolution of the economy.

“While I expect the ongoing rate increases to be appropriate, given the uncertainty as to how these data and conditions will evolve, I will allow this information to guide my judgment on the magnitude of the increases needed,” she said, although she noted that she expects supply chain issues, which were partly responsible for inflation, are likely to persist.

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Reporting by Lindsay Dunsmuir in Scotland Editing by Matthew Lewis

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