MNI BRIEF: Fed's Bowman Prefers Cautious, Gradual Approach
MNI (WASHINGTON) - Federal Reserve Governor Michelle Bowman on Friday said there are greater risks to the price stability side of the central bank's mandate, and she prefers a gradual and cautious approach to lowering interest rates.
"As the US economy remains strong, lowering the policy rate too quickly could unnecessarily stoke demand and potentially reignite inflationary pressures," she said at a Missouri Bankers Association Executive Management Conference. "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."
Bowman said the US economy is strong. "We've got solid growth in economic activity, and our labor market is near full employment, but core inflation continues to be elevated," she said, calling upside inflation risks prominent. "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," she said. (See: MNI INTERVIEW: Ex-Fed's Blinder Sees Stagflation Shock Ahead)