Fed Governor Bowman says December interest rate cut should be the last
Federal Reserve Governor Michelle Bowman said Thursday she supported the recent interest rate cuts but doesn't see the need to go any further.
In a speech to bankers in California that was part monetary policy, part regulation, Bowman said concerns she has that inflation has held «uncomfortably above» the Fed's 2% goal lead her to believe that the quarter percentage point reduction in December should be the last one for the current cycle.
«I supported the December policy action because, in my view, it represented the [Federal Open Market Committee's] final step in the policy recalibration phase,» the central banker said in prepared remarks. Bowman added that the current policy rate is near what she thinks of as «neutral» that neither supports nor restrains growth.
Despite the progress that has been made, there are «upside risks to inflation,» Bowman added. The Fed's preferred inflation gauge showed a rate of 2.4% in November but was at 2.8% when excluding food and energy, a core measure that officials see as a better long-run indicator.
«The rate of inflation declined significantly in 2023, but this progress appears to have stalled last year with core inflation still uncomfortably above the Committee's 2 percent goal,» Bowman added.
The remarks come the day after the FOMC released minutes from the Dec. 17-18 meeting that showed other members also were concerned with how inflation is running, though most expressed confidence it will drift back toward the 2% goal, eventually getting there in 2027. The Fed sliced a full percentage point off its key borrowing rate from September through December.
In fact, other Fed speakers this week provided views contrary to that of Bowman, who is generally regarded as one of the
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