MNI BRIEF: Fed's Bowman Says Policy Appears To Be Restrictive

Federal Reserve Governor Michelle Bowman said Thursday it will eventually become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive, but warned there are a number of upside risks to inflation.

"While the current stance of monetary policy appears to be at a restrictive level, I remain willing to raise the target range for the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed," she said in prepared remarks for an unscheduled speech to a bankers association convention. "Restoring price stability is essential for achieving maximum employment over the longer run." (See: MNI INTERVIEW: Fed Might Not Cut Rates Until 2025-Swanson)

Bowman said her baseline outlook continues to be that inflation will decline further with the policy rate held steady, and should inflation move sustainably toward the central bank's 2% goal, it will eventually become appropriate to gradually lower the federal funds rate. She pointed to upside inflation risks from geopolitics, persistent labor market tightness, and fading improvements in supply chains.