Fed official highlights caution approaches towards interest rates amid inflation concerns
Date
6/26/2024 8:28:52 AM
(MENAFN) Michelle Bowman, a member of the Federal Reserve Board of Governors, highlighted on Tuesday her cautious approach towards future interest rate adjustments, emphasizing the need to sustain progress on inflation. Speaking at Policy Exchange, a London-based think tank, Bowman indicated her readiness to raise interest rates if inflationary trends stall or reverse.
Citing uncertainties in the economic outlook, Bowman warned against prematurely reducing the Fed's policy rate, which could potentially trigger a resurgence in inflation. Such a scenario, she cautioned, might necessitate further rate hikes in the future to steer inflation back towards the central bank's target of 2 percent over the long term.
The Federal Reserve opted not to increase interest rates on June 12, marking the fourth time this year it held rates steady, following a similar pattern in 2023. The last rate hike, a 25 basis points increase, occurred on July 26 of the previous year.
During a period spanning 11 meetings from March 2022 to July 2023, the Fed aggressively raised rates by a cumulative 525 basis points in response to record-high inflation, which reached its peak in the summer of 2022, the highest in over four decades.
While some analysts had anticipated a potential rate cut by the first half of this year, current expectations now lean towards September, with the Federal Open Market Committee (FOMC) maintaining a cautious stance. Bowman, who holds a voting right on the FOMC this year, stressed the importance of considering various economic scenarios in shaping future monetary policy decisions.
Bowman's remarks underscore the Fed's commitment to navigating inflationary pressures judiciously, balancing economic stability with the imperative to maintain price stability in the long term.
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