Michel Bowman, the Federal Reserve’s vice chair for oversight, announced that uncertainty about rising inflation and the potential for distortions in economic data from the past year’s record government shutdowns justify waiting before moving forward with further interest rate cuts.
Bowman said that while there were still downside risks facing the labor market, he intended to steer monetary policy toward neutral levels at a more cautious pace this year.
enough space
“After cutting interest rates by a total of 75 basis points late last year, we have had plenty of room to wait some time before taking further action, allowing us to assess the impact of lower levels of monetary policy restraint in supporting general financial conditions and the labor market,” Bowman said in prepared remarks for a recent event on the Hawaiian island of Oahu.
Mr Bowman supported the decision to keep rates unchanged, announced this week, following three consecutive rate cuts late last year.
majority vote
Policymakers voted 10 to 2 to keep the benchmark interest rate within the target range of 3.5% to 3.75%, but Federal Reserve President Stephen Maylan and Governor Christopher Waller opposed the decision and wanted to cut interest rates by a quarter of a percentage point.
He added: “The question that was on my mind at this meeting was about the timing of these rate cuts. The choice was between continuing to ease restrictive monetary policy and reach what I estimate to be a neutral level by next April’s meeting, or moving towards this level at a more measured pace throughout the year.”
Federal Reserve Vice Chair Michelle Bowman announced that given the uncertainty surrounding rising inflation and potential distortions in economic data from last year’s unprecedented government shutdown, there was sufficient justification for a pause before proceeding with further rate cuts.
Downside risks facing the labor market remain, Bowman said, but the trend is toward a more cautious pace of steering monetary policy toward neutral levels this year.
enough room
“After cutting interest rates by a total of 75 basis points over part of last year, we have ample room to wait a little before taking further action, allowing us to assess the impact of the latter of the lower levels of monetary policy on overall financial conditions and support for the labor market,” Bowman said in prepared remarks for a recent event on the Hawaiian island of Oahu.
Bowman this week supported the Fed’s decision to keep interest rates unchanged after three consecutive rate cuts late last year.
majority vote
Policymakers voted by a 10-2 majority to keep the benchmark interest rate within its target range of 3.5% to 3.75%, but Federal Reserve President Stephen Moore and Governor Christopher Waller opposed the decision and supported a quarter-point rate cut.
He added: “The question that was on my mind at this meeting was about the timing of these rate cuts: the choice between continuing to ease monetary tightening and reach what I estimate to be a neutral level by the upcoming April meeting, or moving towards this level at a more measured pace throughout the year.”
