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FED: Bowman Eyes Upside Inflation Risks, But Probably Wouldn't Oppose Dec Cut

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Fed Gov Bowman (hawk, permanent voter) maintains her concern over stubborn inflation, saying at an event Friday that lowering rates too quickly could reignite inflation, and as such she prefers to ease "cautiously" and "gradually". 

  • She doesn't provide a steer on her December meeting decision preference, but emphasized that inflation is her biggest priority - suggesting a typically hawkish approach, pending next week's CPI/PPI data.
  • While her view is that it's hard to see the current level of rates as restrictive, we're doubtful she would dissent to a broader FOMC consensus on what now seems like a likely 25bp cut in December (recall she dissented to the size of the 50bp cut in September; she says that she doesn't take a dissenting vote "lightly").
  • On her approach to rate cuts: "As the US economy remains strong, lowering the policy rate too quickly could unnecessarily stoke demand and potentially reignite inflationary pressures... As we're looking forward and as I'm considering decision-making within the FOMC context, I would prefer that we proceed cautiously and gradually in lowering the policy rate as inflation remains elevated."
  • On disinflation stalling and the December decision: We've seen progress in lowering inflation but that progress has stalled. So in my view, upside risks to inflation remain prominent, especially at full employment. We'll see some more inflation data next week, that will help support my approach to the December FOMC decision...
  • "Our goal is 2%. It's not 2.5% percent, it's not 2.7%, it's 2% and we haven't yet accomplished 2% and from what we've seen over the past, well, actually, since May, we haven't seen any decline in the rate of increase in inflation since that time."
  • On November nonfarm payrolls: Our labor market is near full employment...core inflation continues to be elevated. Although it's increased this year, the unemployment rate remains at a historically low level, below my estimate of full employment. The labor market remains tight, the rise in unemployment rate reflects less hiring...The unreliability of the labor market data makes me cautious about taking signal from the data. 
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Fed Gov Bowman (hawk, permanent voter) maintains her concern over stubborn inflation, saying at an event Friday that lowering rates too quickly could reignite inflation, and as such she prefers to ease "cautiously" and "gradually". 

  • She doesn't provide a steer on her December meeting decision preference, but emphasized that inflation is her biggest priority - suggesting a typically hawkish approach, pending next week's CPI/PPI data.
  • While her view is that it's hard to see the current level of rates as restrictive, we're doubtful she would dissent to a broader FOMC consensus on what now seems like a likely 25bp cut in December (recall she dissented to the size of the 50bp cut in September; she says that she doesn't take a dissenting vote "lightly").
  • On her approach to rate cuts: "As the US economy remains strong, lowering the policy rate too quickly could unnecessarily stoke demand and potentially reignite inflationary pressures... As we're looking forward and as I'm considering decision-making within the FOMC context, I would prefer that we proceed cautiously and gradually in lowering the policy rate as inflation remains elevated."
  • On disinflation stalling and the December decision: We've seen progress in lowering inflation but that progress has stalled. So in my view, upside risks to inflation remain prominent, especially at full employment. We'll see some more inflation data next week, that will help support my approach to the December FOMC decision...
  • "Our goal is 2%. It's not 2.5% percent, it's not 2.7%, it's 2% and we haven't yet accomplished 2% and from what we've seen over the past, well, actually, since May, we haven't seen any decline in the rate of increase in inflation since that time."
  • On November nonfarm payrolls: Our labor market is near full employment...core inflation continues to be elevated. Although it's increased this year, the unemployment rate remains at a historically low level, below my estimate of full employment. The labor market remains tight, the rise in unemployment rate reflects less hiring...The unreliability of the labor market data makes me cautious about taking signal from the data.