MNI: Fed's Bowman Cites Lingering Inflation Concern In Dissent
Governor Miki Bowman wanted a smaller first rate cut this week.
Federal Reserve Governor Michelle Bowman said Friday she preferred a smaller interest rate cut this week to start the Fed's easing cycle because inflation remains a concern.
"Although it is important to recognize that there has been meaningful progress on lowering inflation, while core inflation remains around or above 2.5%, I see the risk that the committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate," she said in a statement.
"We have not yet achieved our inflation goal. I believe that moving at a measured pace toward a more neutral policy stance will ensure further progress in bringing inflation down to our 2% target. This approach would also avoid unnecessarily stoking demand."
The U.S. economy remains strong and the labor market is near full employment, and it was appropriate to start cutting rates, she said.
"I agree that at this meeting it was appropriate to recalibrate the level of the federal funds rate and begin the process of moving toward a more neutral policy stance. In my view, however, a smaller first move in this process would have been a preferable action," she said.
The FOMC cut the fed funds rate target to a 4.75%-5% range Wednesday. (See: MNI INTERVIEW: Fed Can Cut Gradually If Jobs Stay Strong- Kohn)