© Reuters. U.S. Federal Reserve Governor Michelle Bowman provides her first public remarks as a Fed policymaker at an American Bankers Association convention in San Diego, California, U.S., February 11 2019. REUTERS/Ann Saphir/File Photo
(Reuters) – Federal Reserve Governor Michelle Bowman on Friday mentioned she expects U.S. inflation to say no additional, however flagged worries about upward value strain from rising wages and warned in opposition to reducing rates of interest too quickly.
“My baseline outlook is that inflation will decline further with the policy rate held at the current level,” Bowman mentioned in remarks ready for supply to a banking convention in Maui, Hawaii, noting that latest declines in inflation have been “encouraging.”
If inflation continues to say no sustainably towards the Fed’s 2% aim, she mentioned, “it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive.”
But stronger-than-expected job market knowledge revealed Friday suggests a pickup in wage progress and a stalling out of final yr’s progress towards labor market rebalancing, she mentioned, including that labor market tightness may preserve underlying inflation elevated.
“I will remain cautious in my approach to considering future changes in the stance of policy,” Bowman mentioned. “Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run.”
Bowman voted together with her Fed colleagues on Wednesday to maintain the Fed’s coverage rate on maintain within the 5.25%-5.5% vary, the place it has been since final July. Most Fed policymakers anticipate a spherical of rate cuts this yr, with markets at the moment betting they are going to start at their April 30-May 1 assembly.