Fed Governor Michelle Bowman warns against hiking interest rates because of inflation spike
Federal Reserve Governor Michelle Bowman has expressed caution about raising interest rates in response to the recent inflation spike. She emphasized that reacting to temporary energy-driven inflation could impose unnecessary constraints on the economy. Bowman's comments come amid expectations that the Fed will maintain its current rates until at least early 2027.
- ▪Bowman warned against raising interest rates to combat inflation that is above the Fed's 2% target.
- ▪She stated that adjusting policy for energy-driven inflation surges has been ineffective in the past.
- ▪Current market expectations indicate no chance of interest rate cuts until at least 2027.
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Federal Reserve Governor Michelle Bowman on Friday cautioned against raising interest rates to address the current spike in prices.With inflation running well above the central bank's 2% target, markets are expecting the Fed to stay on hold this year then possibly start raising rates in early 2027. Current pricing is indicating virtually no chance of cuts anytime through at least 2027.But Bowman said adjusting policy to offset energy-driven inflation surges has proven ineffective."Reacting to temporarily elevated energy price inflation would add unwarranted policy restraint, weighing unnecessarily on economic activity and labor market conditions," the policymaker said at a conference in Reykjavík, Iceland.Bowman added that research shows that when reacting to temporary energy shocks,…
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