Policymakers need to be careful not to ease policy too quickly
BBN Desk
At a time when the whole world has been anxiously waiting for the rate cuts to be announced by the Federal Reserve, its Governor Michelle Bowman is of the view that rates have to be raised to rein in inflation.
Pointing out several potential upside risks of inflation, she avers that policymakers need to be careful not to ease policy too quickly, reports an international media house.
“While it is not my baseline outlook, I continue to see the risk that at a future meeting, we may need to increase the policy rate further should progress on inflation stall or even reverse, she said in prepared remarks for a speech to a group of Fed watchers in New York. “ Reducing our policy rate too soon or too quickly could result in rebound inflation, requiring further future policy rate increase to return inflation to 2 per cent over the long run.’’
As a member of the Board of Governors, Bowman is a permanent voting member of the rate-setting Federal Open Market Committee. Since taking office in late 2018, her public speeches have put her on the more hawkish side of the FOMC, meaning she favours a more aggressive posture towards containing inflation.
Bowman said her most likely outcome remains that “ it will eventfully become appropriate to lower,’’ rates, though she noted that “we are still not yet at the point,’’ cutting as “ I continue to see several upside risks to inflation.’’
At a time when the whole world has been anxiously waiting for the rate cuts to be announced by the Federal Reserve, its Governor Michelle Bowman is of the view that rates have to be raised to rein in inflation.
Pointing out several potential upside risks of inflation, she avers that policymakers need to be careful not to ease policy too quickly, reports an international media house.
“While it is not my baseline outlook, I continue to see the risk that at a future meeting, we may need to increase the policy rate further should progress on inflation stall or even reverse, she said in prepared remarks for a speech to a group of Fed watchers in New York. “ Reducing our policy rate too soon or too quickly could result in rebound inflation, requiring further future policy rate increase to return inflation to 2 per cent over the long run.’’
As a member of the Board of Governors, Bowman is a permanent voting member of the rate-setting Federal Open Market Committee. Since taking office in late 2018, her public speeches have put her on the more hawkish side of the FOMC, meaning she favours a more aggressive posture towards containing inflation.
Bowman said her most likely outcome remains that “ it will eventfully become appropriate to lower,’’ rates, though she noted that “we are still not yet at the point,’’ cutting as “ I continue to see several upside risks to inflation.’’
