Fed's Bowman: Don't See Any Rate Cuts for 2024
Federal Reserve Gov. Michelle Bowman said a swift decrease in interest rates could lead to a rebound in inflation. Interest rates are tied to mortgage rates.
WASHINGTON – The Federal Reserve will likely leave interest rates steady "for some time" in a bid to help corral "elevated" inflation in the U.S., Fed Governor Michelle Bowman said on Tuesday, adding that she does not expect the central bank to cut borrowing costs in 2024.
At its most recent gathering earlier this month, the Fed left the benchmark federal funds rates unchanged at a more than two-decade high range of 5.25% to 5.5% and signaled that it would roll out just one cut this year, as it looks to cool price growth back down to its 2% target.
"Should the incoming data indicate that inflation is moving sustainably toward our 2% goal, it will eventually become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive," Bowman said in remarks prepared prior to a speech in London.
But Bowman -- typically seen as one of the Fed's more hawkish voices -- flagged that it is not yet "appropriate" to lower rates, adding that the policy-setting Federal Open Market Committee should keep in mind a range of possible scenarios.
Moving too quickly to bring down rates, Bowman warned, could result in a rebound in inflationary pressures. As a result, Bowman noted that she remains "willing" to raise rates even further should progress on inflation stall or reverse.
"Given the risks and uncertainties regarding my economic outlook, I will remain cautious in my approach to considering future changes in the stance of policy," she said. Bowman later said she does not foresee any Fed rate cuts in 2024, and instead expects potential reductions to come next year.
Her comments come after San Francisco Fed President Mary Daly said on Monday that recent "bumpiness" in inflation has "not inspired confidence" in policymakers and muddied the Fed's path toward achieving price stability.
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