Fed's Bowman: Additional hikes will be needed

<p><a href="https://www.forexlive.com/terms/f/federal-reserve/">Federal Reserve</a> board governor Michelle Bowman opening remarks at a Cleveland Fed conference on "Communities thriving in a challenging economy".</p><ul><li>Additional policy rate increases will be needed to reach sufficiently restrictive level and control inflation</li><li>Inflation still 'unacceptably high' despite drop in the headline number</li><li>Mon pol has some effect on the economy but core inflation has essentially plateaued since the fall of 2022</li><li>Will look for inflation on a 'consistent downward path' in deciding appropriate policy steps at coming meetings</li><li><a href="https://www.federalreserve.gov/newsevents/speech/bowman20230622a.htm" target="_blank" rel="nofollow">Full text</a></li></ul><p>She tilts hawkish so it's not a surprise.</p><p>Here's the main part of her speech:</p><blockquote>Recent research has argued that pandemic-related supply and demand
factors, in addition to unusually expansionary fiscal policy,
contributed to high <a href="https://www.forexlive.com/terms/i/inflation/">inflation</a>. And global and U.S. supply chain
disruptions and shipping and logistics challenges drove up prices for a
number of goods.<a href="https://www.federalreserve.gov/newsevents/speech/bowman20230622a.htm#fn2" title="footnote 2">2</a>
Many of the supply-side issues have now abated, and the FOMC has
rapidly increased the federal funds rate to bring demand into better
balance with supply. But while headline inflation has declined
substantially, it remains far too high. Therefore, I believe there is
more work to do to bring inflation down.</blockquote><blockquote>I supported the FOMC's decision last week to hold the federal funds
rate target range steady and to continue to reduce the Fed's securities
holdings; however, I believe that additional policy rate increases will
be necessary to bring inflation down to our target over time. Although
tighter monetary policy has had some effect on economic activity and
inflation to date, we have seen core inflation essentially plateau since
the fall of 2022, and I expect that we will need to increase the
federal funds rate further to achieve a sufficiently restrictive stance
of monetary policy to meaningfully and durably bring inflation down. I
will continue to monitor the incoming data and to look for signs that
inflation is on a consistent downward path as I consider appropriate
monetary policy at future meetings.</blockquote><p>She doesn't offer any hints there about how much more tightening is needed.</p>

This article was written by Adam Button at www.forexlive.com.