Fed's Bowman: Patience Needed for Rate Cut as Inflation Risks Persist

Federal Reserve Governor Bowman recently delivered a speech on the economic outlook, highlighting key aspects of the current monetary policy and inflation trends. The governor emphasized that while inflation is expected to decline, there are still upside risks, and a greater degree of confidence in the inflation decline is needed before considering another rate cut. He suggested that patience in waiting for a rate cut would help better understand the impact of government policies.

The labor market has not tightened due to a slowdown in hiring, but the unemployment rate remains below the expected level for full employment. Wage growth has been above the level consistent with the Fed's inflation target. Currently, the U.S. economy remains strong, with economic activity experiencing robust growth and the labor market approaching full employment. Core inflation, although slightly elevated, appears to have returned to a downward trajectory. The governor's baseline expectation is that core inflation will continue to moderate this year.

Monetary policy, according to Governor Bowman, is not on a preset course. This statement suggests that the Federal Reserve is flexible and adaptable in its approach to monetary policy, ready to adjust its stance as needed to address economic developments and changes in inflation trends.