Aug. 7 (UPI) — Even with some improvement, additional rate hikes may be necessary to bring inflation closer to the 2% target rate, U.S. Federal Reserve Gov. Michelle Bowman said Monday.
Bowman was addressing the Federal Reserve Bank of Atlanta a few short weeks after the central bank opted to raise its lending rates by 25 basis points. Progress has been made in the fight against inflation, she said, but rates remain above target and may warrant additional action.
“Of course, monetary policy is not on a pre-set path, and I will be closely monitoring the incoming data and their implications for the economic outlook,” she said.
Consumer-level prices in the U.S. economy, an inflation gauge watched closely by the Federal Reserve, expanded last month since early 2021, but remained above the 2% target rate. The Personal Consumption Expenditures price index increased by 3% over the 12-month period to June, a slowdown from the 3.8% reported year-on-year to May.
So-called core PCE, which strips out volatile food and energy prices, showed a 4.1% expansion year-on-year to June, lower than the 4.6% annual reading to May and slightly better than analysts expected.
“I will be looking for evidence that inflation is on a consistent and meaningful downward path as I consider whether further increases in the federal funds rate will be needed, and how long the federal funds rate will need to remain at a sufficiently restrictive level” Bowman said.
That’s been something of a running theme at the Fed. In a statement released after the latest rate increase, the Fed said it will “continue to assess additional information and its implications for monetary policy.”
The paused rate hikes in June, but made it known that more were likely later this year. The federal funds rate range is at a 22-year high of 5.25% to 5.5%.
Another batch of data on U.S. inflation are out Thursday.
