The Federal Reserve is considering raising interest rates even higher in order to combat rising inflation, according to Fed Gov. Michelle Bowman. Speaking at a meeting of the Kansas Bankers Association in Colorado, Bowman expressed her belief that additional rate increases will be necessary to bring inflation down to the Federal Open Market Committee’s target of 2%.
Last month, the Fed raised its benchmark interest rate to a range of 5.25% to 5.5%, the highest it has been since 2001. Bowman supported this hike and emphasized the need for sustained evidence that the recent decrease in inflation is on a meaningful path towards the 2% goal.
Bowman made it clear that monetary policy is not predetermined and future decisions will be based on data. She stated that if incoming data indicates that progress on inflation has stalled, the Federal Reserve should be prepared to raise the federal funds rate at a future meeting. Returning inflation to the 2% goal is crucial for achieving a strong labor market and a robust economy.
In June, the Fed projected two more rate hikes before the end of the year. However, Chair Jerome Powell has not confirmed whether the final hike in this rate cycle will occur in September.