Bowman Has Shifted Rate Cut Projections To Future Years

Highlights from Governor Bowman's moderated Q&A:

• Scenario-based monetary policy: I’ve begun to shift the way I think about monetary policy decision making in more of a scenario-type basis. We need to think about how the economy could be evolving, especially as we’re approaching a time where we are seeing a little bit more progress on inflation after significant progress last fall that since moderated.
• Not in a rush to cut rates: What aspects of data are you particularly looking at? Bowman: How the inflation data involves and each category within it. We also need to understand how the labor market is evolving. If we were to see some deterioration in the labor market and we didn’t see progress on inflation, that might not be as influential on me. But if we saw a lowering in inflation and also a deterioration in the labor market that might be a little bit more indicative that we were closer to needing to move from my perspective.

• Cuts in future years: One small misquote, possibly just a technicality, from the BBG headlines re seeing future rate cuts in future years vs the 2025 quoted ( "*BOWMAN: DON'T SEE ANY RATE CUTS FOR 2024, SHIFTED CUTS TO 2025" - bbg). That's to say she could be the sole dot looking for no cuts through 2025 as well.
• Q: I think you’ve indicated that you’ve not written in any rate cuts for 2024 and the Fed should, in your words, proceed carefully and deliberately. Is that still your view?
• Bowman: Yes that’s still my view. I have not written further rate cuts in my SEPs for the bulk of this year. I’ve shifted those into future years. I do see that as we begin to make consistent progress on inflation, as that consistently declines over time, that we will be in a position that we will need to lower rates. Right now, with the uncertainty of the economic outlook and what the data is telling us that we’re in a good place right now to understand how that might evolve.