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Gov Bowman Nods To 225bp Of Further 2022 Hikes

FED

Fed Gov Bowman doesn't make much monetary policy commentary, but she comes out swinging in a speech today - supporting a 75bp hike in July and "at least" 50bp in "the next few subsequent meanings" (I'd interpret that as Sep, Nov, and Dec) and possibly beyond that.

  • 225bp more in 2022 hikes? "I strongly supported the FOMC's decision last week, and I expect to support additional rate increases until we see significant progress toward bringing inflation down. Based on current inflation readings, I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them. Depending on how the economy evolves, further increases in the target range for the federal funds rate may be needed after that."
  • Need to bring real rates positive: "Since inflation is unacceptably high, it doesn't make sense to have the nominal federal funds rate below near-term inflation expectations. I am therefore committed to a policy that will bring the real federal funds rate back into positive territory."
  • Acknowledges hiking risks higher unemployment: "While I expect that the labor market will remain strong as the FOMC continues to tighten monetary policy, these actions do not come without risk. But in my view, our number one responsibility is to reduce inflation."
  • Supports MBS sales eventually: "Since the longer-term goal of the balance sheet reduction plan includes a Treasuries-only balance sheet, it would make sense to eventually incorporate MBS sales into the plan so that reaching this goal does not take too long. My longer-term goal would be to get the Fed out of the business of indirectly intervening in the real estate market."
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Fed Gov Bowman doesn't make much monetary policy commentary, but she comes out swinging in a speech today - supporting a 75bp hike in July and "at least" 50bp in "the next few subsequent meanings" (I'd interpret that as Sep, Nov, and Dec) and possibly beyond that.

  • 225bp more in 2022 hikes? "I strongly supported the FOMC's decision last week, and I expect to support additional rate increases until we see significant progress toward bringing inflation down. Based on current inflation readings, I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them. Depending on how the economy evolves, further increases in the target range for the federal funds rate may be needed after that."
  • Need to bring real rates positive: "Since inflation is unacceptably high, it doesn't make sense to have the nominal federal funds rate below near-term inflation expectations. I am therefore committed to a policy that will bring the real federal funds rate back into positive territory."
  • Acknowledges hiking risks higher unemployment: "While I expect that the labor market will remain strong as the FOMC continues to tighten monetary policy, these actions do not come without risk. But in my view, our number one responsibility is to reduce inflation."
  • Supports MBS sales eventually: "Since the longer-term goal of the balance sheet reduction plan includes a Treasuries-only balance sheet, it would make sense to eventually incorporate MBS sales into the plan so that reaching this goal does not take too long. My longer-term goal would be to get the Fed out of the business of indirectly intervening in the real estate market."