Additional interest rate hikes will likely be needed in order to lower inflation to the U.S. Federal Reserve’s 2% target, Fed Governor Michelle Bowman said on Monday.
Bowman, in remarks prepared for delivery to a “Fed Listens” event in Atlanta that largely repeated comments she made to a banking group on Saturday, said she backed the latest interest rate increase last month because inflation remains too elevated, and job growth and other indications of activity show the economy has continued expanding at a “moderate pace.”
“Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the (Federal Open Market Committee’s) goal,” she said.
“I will be looking for evidence that inflation is on a consistent and meaningful downward path as I consider whether further increases in the federal funds rate will be needed, and how long the federal funds rate will need to remain at a sufficiently restrictive level,” Bowman said.
The Fed late last month raised its benchmark short-term interest rate by a quarter percentage point to a range of 5.25% to 5.50%.
Investors by and large believe that will prove to have been the last increase of a campaign the Fed kicked off in March 2022 to bring inflation down from the highest levels in four decades, but U.S. central bank officials have emphasized it is too early to make that judgment.
Officials next meet in September, with an unusually long gap between meetings allowing them to review a larger body of data on inflation, the job market and the wider economy than is typically the case from one meeting to the next.
Recent data has shown inflation has slowed significantly in recent months, and on Friday the Labor Department reported lower-than-expected employment growth in July.
That said, the unemployment rate dropped slightly and wage growth did not slow as expected and remains at a growth rate Fed officials see as inconsistent with their 2% target.