Michelle Bowman, a member of the Federal Reserve Board, said on Thursday that it is not appropriate to lower interest rates now. She reiterated that she is not yet ready to support the central bank's interest rate cut with high inflation pressures. In her prepared remarks, she said that the current stance of the Federal Reserve's interest rates is still "restrictive," and that price pressures will subside even if monetary policy is maintained at its current level. Bowman pointed out that if inflation approaches the Federal Reserve's 2% target, it may consider cutting interest rates; but if inflation does not slow down, it is still willing to raise interest rates again. She emphasized that she remains "cautious" when weighing future changes in Federal Reserve interest rates. " If future data indicate that inflation is moving steadily towards our 2% target, gradually reducing the federal fund interest rate to prevent monetary policy from becoming too tight will eventually be appropriate. We have not yet reached the appropriate time to lower policy interest rates, and I continue to see some upward risks in inflation.

She said in a speech that the Federal Reserve's current interest rate stance is still "restrictive," and even if monetary policy is maintained at the current level, price pressures will cool down.

This speech was prepared for the annual meeting of the Idaho, Nevada, Oregon and Washington Bankers Association in Stevenson, Washington in 2024.

Bowman pointed out that if inflation approaches the Federal Reserve's 2% target, it may consider cutting interest rates; but if inflation does not slow down, it is still willing to raise interest rates again. She emphasized that she remains "cautious" when weighing future changes in Federal Reserve interest rates.

She said, "If future data indicate that inflation is moving steadily towards our 2% target, gradually reducing the federal fund interest rate to prevent monetary policy from becoming too tight will eventually be appropriate. We have not yet reached the appropriate time to lower policy interest rates, and I continue to see some upward risks in inflation."

"But if future data show that inflation progress is stagnant or reverse, I am still willing to raise the federal fund interest rate target range at future meetings," she added.

Bowman's remarks are consistent with her recent comments on economic and policy prospects. She made the above remarks when Federal Reserve officials were looking for evidence of inflation pressures steadily falling to the 2% target. Most Fed officials currently expect a 0.25 percentage point interest rate cut this year, and many market participants believe the Fed will cut interest rates at the FOMC meeting in September.

In an earlier speech this week, Bowman said she did not expect to cut interest rates this year and may relax next year.

Bowman said in Thursday's speech that overall economic activity was strong this year but slowed in the face of stagnant inflation progress. She noted that the easing of the financial environment has posed challenges to future price trends.

"Another risk is that the loosening of the financial environment since the end of last year, reflected in the sharp rise in stock market valuations and additional fiscal stimulus measures, may increase the momentum of demand, hinder any further progress, even lead to a re-acceleration of inflation," she said.

Bowman also said that the reduction in the number of American banks is a problem. At the same time, not enough new banks have been created.

"In the long run, the absence of newly established banks will create a void in the banking system, which may lead to a reduction in reliable and reasonably priced credit supply, a lack of financial services in the market, and bank activities continuing to shift outside the banking system," she added.

Editor/Emily