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Fed’s Bowman expects more interest rate hikes to tackle inflation

Federal Reserve Governor Michelle Bowman anticipates the need for additional interest rate hikes to combat inflation and steer it toward the Federal Open Market Committee’s 2% target. Addressing the Kansas Bankers Association in Colorado, Bowman emphasized the importance of reducing inflation to a tolerable level and achieving a sustainable economic environment.

Last month, the Federal Reserve raised its benchmark interest rate to 5.25% to 5.5%, marking the highest rate since 2001. Bowman supported the hike after a break in June. However, he stressed the need for more evidence of a sustained fall in inflation before considering further rate hikes.

While acknowledging the positive impact of recent lower inflation readings, Bowman emphasized the data-driven nature of monetary policy decisions. He stressed that the federal funds rate should remain at a restrictive level until consistent evidence emerges of inflation moving toward the 2% target.

Bowman reinforced the Fed’s flexibility, stating that monetary policy is not on a pre-set course. Decisions on future interest rate adjustments will depend on incoming data and the progress of inflation. The ultimate goal is to achieve a strong labor market and a strong economy.

In June, the Federal Reserve forecast two more rate hikes before the end of the year, but the exact timing remains uncertain. Chairman Jerome Powell has refrained from confirming whether the planned final hike in this rate cycle will occur in September. The Fed continues to monitor economic indicators to guide its policy decisions.

This article is sourced from and written by AI.

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