On Monday, Michelle Bowman, Governor of the Federal Reserve, said that she wants to see more progress on inflation before deciding on another rate cut.
At the American Bankers Association, Bowman said that she would like to ensure that inflation continues to subside before the rate can be further adjusted.
She claims that soaring consumer prices have hindered progress. Even if inflation continues to slow down as expected this year, the path to disinflation may take longer than ideal.
Recent data shows the consumer price index (CPI) rose 0.5% month-over-month in January, which is higher than Dow Jones’ 0.3% forecast. Bringing the annual inflation rate to 3%, sitting just above 2.9% from consensus estimation.
In the January policy meeting, the Fed maintained its target rate at around 4.25-4.5%. Bowman said this level is appropriate as it would allow the Committee to observe the evolving inflation data closely.
This cautious stance would also enable the central bank to further review economic activity indicators, while also waiting for clarity on the effect of the White House policies on the economy, Bowman added.
President Donald Trump’s tariffs on the U.S. largest trading partners have raised alarm among economists on surging prices. Dampening expectations on further rate cuts in 2025 as the trade war is heating up. According to CME Group Data, traders are only proximate to a single quarter-percentage-point cut this year.
