She is the new "eagle king" of the Fed? Governor Bowman reiterated that the central bank still needs to raise interest rates several times
Cai Lian News, October 3 (Editor Zhao Hao) On Monday (October 2), local time, Fed Governor Michelle Bowman said again that the bank still needs to raise interest rates several times to reduce inflation to the central bank's target level.
Data released on Friday showed that the Fed's favorite inflation measure, the personal consumption expenditures (PCE) price index, rose 3.5% year-on-year in August, while the core PCE price index, excluding food and energy prices, rose 3.9% year-on-year, returning to within 4% after nearly two years.
Year-on-year change in the core PCE price index
"I continue to expect that further rate hikes may be needed to bring inflation back to 2 percent in time," Bowman said at an event in Canada, "and the risk that high energy prices could reverse some of the progress we've made on inflation in recent months continues." ”
Two weeks ago, the Fed decided to maintain its target range for the federal funds rate between 5.25% and 5.50%. Since March 2022, the bank has intensively raised interest rates 11 times to curb high inflation, raising interest rates from near zero to a range of 5.25% to 5.5%, the highest level in 22 years.
The dot plot, released at the same time, showed that most central bankers believe there will be another 25 basis point rate hike this year, and the forecast for a rate cut next year is only about 50 basis points. Shortly after the resolution was announced, Bowman noted that she was in favor of continuing to raise rates and possibly more than once.
Today, Bowman told bankers that she believes "progress on inflation is likely to be slow given the current level of monetary policy constraints." She added, "Further policy tightening is needed to reduce inflation in a sustainable and timely manner." ”
In 2020, Bowman was sworn in as a Fed governor
Media analysts believe that Bowman's remarks today seem to indicate that she does not believe the signs of "sustained decline in price growth" shown by the August inflation data. There is even speculation that she may be the policymaker in the dot plot who "expects policy rates above 6% by the end of 2024."
On the same day, Jamie Dimon, CEO of JPMorgan Chase, one of the largest financial services institutions in the United States, also said in an interview that oil prices and trade restructuring are exacerbating inflation. Asked if interest rates would rise to 7 percent, as he stated last week, Dimon replied "yes."
However, hedge fund mogul Bill Ackerman, founder of Pershing Square Capital Management, believes that the Fed may have completed all the rate hikes, "I think the economy is starting to slow down, and real interest rates are high enough to slow down economic growth." ”
(Cai Lian News Agency Zhao Hao )