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While many economists said the U.S. April consumer price inflation data showed enough progress on reducing price pressures to justify the central bank holding interest rates steady for the rest of the year, Fed Gov. Michelle Bowman signaled early Friday that she was not on-board with that view.
“In my view, the most recent CPI and employment reports have not provided consistent evidence that inflation is on a downward path, and I will continue to closely monitor the incoming data as I consider the appropriate stance of monetary policy going into our June meeting,” Bowman said, in speech at a European Central Bank conference in Frankfurt.
See: U.S. consumer price inflation below 5% for first time in two years
The Fed has raised its benchmark interest rate to a range of 5%-5.25% over the past 14 months. Investors expect the Fed to pause its rate hiking campaign at its next meeting in mid-June.
In her talk, Bowman said that the steady increase means that interest rates are now high enough to slow the economy’s momentum.
But she said she doesn’t know yet if the downward pressure from rates is enough to bring inflation down and more hikes may still be needed.
“Should inflation remain high and the labor market remain tight, additional monetary policy tightening will likely be appropriate to attain a sufficiently restrictive stance of monetary policy to lower inflation over time,” Bowman said.
The Fed Governor also said that she expects rates will need to remain high enough to slow the economy “for some time” to bring inflation down.
Traders in derivative markets expect the Fed to cut its benchmark rate in September.
Stocks
DJIA,
SPX,
were set to open higher on Friday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.40%.
