MNI BRIEF: Fed Gov Bowman Sees Need For Further Rate Increases

Federal Reserve Governor Michelle Bowman on Monday reaffirmed her view that "further rate increases" are needed to return inflation to 2% amid risk that high energy prices could reverse recent progress on inflation.

Friday's PCE inflation reading showed overall inflation rose in part due to higher oil prices, she noted. The median FOMC official expects inflation to stay above 2% through 2025. "This, along with my own expectation that progress on inflation is likely to be slow given the current level of monetary policy restraint, suggests that further policy tightening will be needed to bring inflation down in a sustainable and timely manner," she said in remarks prepared for a Mississippi Bankers Association and Tennessee Bankers Association conference. (See: MNI INTERVIEW: Higher Rates Begin To Bite US Firms)

"I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way."

The majority of FOMC officials expect one more quarter-point increase for the fed funds rate this year, while only one official sees rates at an even higher level of 6.1% by the end of next year. The median FOMC official sees two quarter-point cuts by year end 2024. The individual dot plot projections are anonymous.