Federal Reserve board governor Michelle Bowman opening remarks at a Cleveland Fed conference on “Communities thriving in a challenging economy”.
- Additional policy rate increases will be needed to reach sufficiently restrictive level and control inflation
- Inflation still ‘unacceptably high’ despite drop in the headline number
- Mon pol has some effect on the economy but core inflation has essentially plateaued since the fall of 2022
- Will look for inflation on a ‘consistent downward path’ in deciding appropriate policy steps at coming meetings
- Full text
She tilts hawkish so it’s not a surprise.
Here’s the main part of her speech:
Recent research has argued that pandemic-related supply and demand factors, in addition to unusually expansionary fiscal policy, contributed to high inflation . And global and U.S. supply chain disruptions and shipping and logistics challenges drove up prices for a number of goods.2 Many of the supply-side issues have now abated, and the FOMC has rapidly increased the federal funds rate to bring demand into better balance with supply. But while headline inflation has declined substantially, it remains far too high. Therefore, I believe there is more work to do to bring inflation down.
I supported the FOMC’s decision last week to hold the federal funds rate target range steady and to continue to reduce the Fed’s securities holdings; however, I believe that additional policy rate increases will be necessary to bring inflation down to our target over time. Although tighter monetary policy has had some effect on economic activity and inflation to date, we have seen core inflation essentially plateau since the fall of 2022, and I expect that we will need to increase the federal funds rate further to achieve a sufficiently restrictive stance of monetary policy to meaningfully and durably bring inflation down. I will continue to monitor the incoming data and to look for signs that inflation is on a consistent downward path as I consider appropriate monetary policy at future meetings.
She doesn’t offer any hints there about how much more tightening is needed.