Source: Finance Association
① Federal Reserve Governor Bowman said on Friday that since inflation remains high, she doesn't expect interest rate cuts this year; ② After the Federal Reserve's quiet period ended, many officials delivered speeches this week, but so far, only Bowman has directly ruled out the possibility of cutting interest rates this year.
On Friday (May 10) local time, Federal Reserve Governor Bowman said that since inflation remains high, she does not expect interest rate cuts this year. Bowman was recently the first US Federal Reserve official to directly rule out the possibility of cutting interest rates this year.
Bowman delivered a speech in Arlington, Texas on Friday. She made the above remarks after her speech. Like other Federal Reserve officials, Bowman argues that the Federal Reserve should proceed with monetary policy carefully and calmly in the future.
However, unlike other colleagues' implicit statements, Bauman bluntly stated that she believes this year is inappropriate for interest rate cuts.
Bauman said in an interview, “Currently, I have not included interest rate cuts in my 2024 economic forecast. I tend to maintain current interest rates for a longer period of time, which is still my basic assumption.” She was referring to the economic forecasts submitted quarterly by Federal Reserve officials.
The Federal Reserve remained on hold during last week's interest rate meeting, keeping the federal funds rate target range unchanged at 5.25% to 5.50%. Since July of last year, the federal funds rate has remained at its highest level in 20 years.
At the press conference after the interest rate meeting, Federal Reserve Chairman Powell pointed out that recent US inflation data is not optimistic and cannot give policymakers more confidence in calming inflation.
Bauman said that after three or four months of disappointing inflation, it will take a long time before she can be sure that inflation will return to the target level of 2%, which is a prerequisite for cutting interest rates.
She added, “So my expectation is to wait a few months, and maybe a few more interest rate meetings before I feel safe about it.”
Bauman said that the US economy is doing well, and consumer spending has always been strong. Regarding future interest rate trends, she said that in the event of an economic shock, policymakers will need to resolve this issue through monetary policy.
With the end of the Federal Reserve's period of silence, many officials delivered speeches this week. Even the two hawkish officials — Minneapolis Federal Reserve Chairman Kashkari and Boston Federal Reserve Chairman Collins — did not directly rule out the possibility of cutting interest rates this year.
Collins said that it may take longer to achieve the 2% inflation target, but she did not estimate when to cut interest rates.
Although Kashkari claims that the possibility of further interest rate hikes cannot be ruled out, he also said that it is still possible to cut interest rates this year.
edit/lambor