US Fed official changes tune to back prolonged pause
WASHINGTON
A senior U.S. Federal Reserve official who recently suggested further interest rate hikes could be needed to tackle inflation said on Jan. 8 that her views had changed due to recent data.
In December, the Fed voted to hold interest rates at a 22-year high and penciled in as many as three interest rate cuts in 2024, citing progress in the fight against rising prices.
Inflation has fallen sharply since peaking in 2022, although it remains above the Fed's long-run target of two percent.
Speaking on Jan. 8, Fed Governor Michelle Bowman, who is a permanent member of the U.S. central bank's rate-setting committee, said she had been encouraged by recent inflation, employment and economic growth figures.
"Based on this progress, my view has evolved to consider the possibility that the rate of inflation could decline further with the policy rate held at the current level for some time," she told a conference in South Carolina.
"Should inflation continue to fall closer to our two percent goal over time, it will eventually become appropriate to begin the process of lowering our policy rate," she continued.
The comments mark a clear departure for Bowman, who said as recently as November that she expected the Fed would need to raise its benchmark lending rate to return inflation to two percent "in a timely way."
But speaking on Jan. 8, Bowman said she did not think the Fed had reached the point when it could start cutting rates, adding that "important upside inflation risks remain."
"I remain willing to raise the federal funds rate further at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed," she said.
