Fed's Bowman over the weekend: Additional rate hikes will be needed

<p>Fed Governor Michelle Bowman spoke over the weekend and said:</p><ul><li>We should remain willing to raise rates at a future meeting if data show inflation progress has stalled.</li><li>In considering further rate hikes and how long to keep rates restrictive, consistent drops in inflation will be looked for.</li><li>Additional U.S. interest-rate increases will be needed.</li><li>Monetary policy is not on a preset course.</li><li>Slowing consumer spending and loosening in labor market conditions will be watched for.</li><li>Recent decline in core inflation is a 'positive' sign, but inflation remains well above target.</li><li>Demand for workers exceeds supply, adding upward pressure on prices.</li><li>No signs of sharp credit contraction from March banking turmoil.</li></ul><p>Bowman supported the Fed's quarter-point increase in interest rates last month due to high inflation, strong consumer spending, a rebound in the housing market, and a labor market that's driving up prices.</p><p>In June forecasts, most Fed policymakers expected the year to end with the Fed policy rate at 5.6%, a quarter-point above the setting established in late July. However, Bowman's comments suggest she believes the rate will need to go higher.</p><p>After the recent rate hike, Fed Chair Jerome Powell left the possibility open for another increase in September, but also indicated that cooler data could justify a pause.</p><p>On Friday, NFP showed some slowing of the pace of hires, but despite the slowing, the unemployment remains at 3.5%, and there are more available jobs than workers to fill them.</p><p>This week, the US CPI will be released on Thursday with expectations of 0.2% for the headline and the core. That YoY is expected to rise to 3.3% from 3.0% last month. A year ago the CPI was reported at 0.0%. That will roll out of the inflation calculation and be replaced by 0.2% increase. </p><p>Bowman comments are a bit more hawkish than those of Goolbee and Bostic from last week. She is a permanent voting member of the Fed. Below are the links to the comments from Fed's Goolsbee and Bostic from last week. </p><p>Goolsbee:</p><ul><li><a href="https://www.forexlive.com/centralbank/feds-goolsbee-any-rate-cut-would-be-far-out-in-the-future-20230801/" target="_blank" rel="follow">Fed's Goolsbee: Any rate cut would be 'far out in the future</a></li><li><p><a href="https://www.forexlive.com/centralbank/feds-goolsbee-the-july-non-farm-payrolls-report-is-pretty-much-what-we-expect-20230804/" target="_blank" rel="follow">Fed's Goolsbee: The July non-farm payrolls report is pretty much what we expect</a></p></li></ul><p>Bostic</p><ul><li><a href="https://www.forexlive.com/centralbank/feds-bostic-we-are-in-a-phase-where-there-is-some-risk-of-overtightening-20230801/" target="_blank" rel="follow">Fed's Bostic: We are in a phase where there is some risk of overtightening</a></li><li><a href="https://www.forexlive.com/centralbank/feds-bostic-fed-likely-to-be-in-restrictive-territory-well-into-2024-20230804/" target="_blank" rel="follow">Fed's Bostic: Fed likely to be in restrictive territory well into 2024</a></li></ul>

This article was written by Greg Michalowski at www.forexlive.com.