Bowman Highlights Inflation Risks, Calls for Gradual Rate Cuts

Federal Reserve Governor Michelle Bowman has expressed a preference for a cautious and gradual approach to future interest rate cuts, emphasizing the need for more data confirmation of inflation moderation before making further adjustments. She noted that inflation risks remain elevated, and current monetary policy may not be significantly restraining economic demand, partly due to easy financial conditions. Bowman highlighted that despite expectations for rate cuts this year, economic indicators, including long-term Treasury yields and labor market stability, suggest a potential need for tighter policy to address inflation. She also pointed out that external factors such as supply chain fragility and geopolitical tensions could affect inflation. The US Dollar Index showed small gains following her comments, reflecting market reactions to her cautious stance. Bowman's remarks suggest a divergence from the Fed’s recent trend of rate cuts, with her advocating for a more measured assessment of economic conditions before proceeding.