“The Craman Countdown” panelists Kate Moore and Joseph LaVorgna predict the Federal Reserve’s interest rate movements and yield curve normalization.
Federal Reserve Governor Michelle Bowman said Tuesday that the central bank does not plan to cut interest rates before the end of the year and is prepared to raise rates again if inflation progress stalls.
“We are not yet at the stage where it is appropriate to cut interest rates,” Bowman said in a planned speech in London.
She warned that cutting rates too quickly risks rekindling high inflation, which would then require further rate hikes to tame price pressures. economyIn a discussion following his speech, Bowman said he did not expect a rate cut this year, but rather was postponing it until the future.
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Bowman, who has a voting power on the 12-member Federal Open Market Committee, reiterated his readiness to tighten monetary policy further if there is evidence that inflation progress is slowing.
Federal Reserve Governor Michelle Bowman speaks at the American Bankers Association conference in San Diego, California on February 11, 2019. (Reuters/Reuters)
“We remain prepared to raise the target range for the federal funds rate at future meetings if inflation stagnates or reverses,” he said. “Given the risks and uncertainties related to the economic outlook, we will continue to remain cautious as we consider future changes to our policy stance.”
The authorities voted At its last meeting in May, the Fed decided to keep interest rates on hold at a range of 5.25 percent to 5.5 percent, the highest level since 2001. In a statement after the meeting, policymakers left the door open to a rate cut this year but stressed they needed “further confidence” that inflation was falling before easing policy.
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Since then, there is some evidence that inflation is starting to ease again, albeit slowly: The May Consumer Price Index showed inflation easing slightly to 3.3% from 3.4% the previous month, easing investor concerns that prices may be rising again, but still well above the Fed’s 2% target.
Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC on May 1, 2024. (Photo by Liu Jie/Xinhua via Getty Images)
“We have seen only modest further inflation developments since the beginning of 2024,” Bowman said. “Core CPI inflation averaged 3.8% annualized through May this year, well above the average inflation rate in the second half of last year, and we expect inflation to remain elevated for the time being.”
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Minutes from the meeting released earlier this month indicated officials were prepared to keep interest rates high for an extended period of time, even after a series of policy changes. Disappointing inflation figures It will increase prices in the first three months of the year and is prepared to do so again if necessary.
“Participants noted the disappointing inflation reading in the first quarter and indications of strong economic momentum, and assessed that it will take longer than previously expected to gain confidence that inflation is moving sustainably towards 2 percent,” the minutes said.
