by Ann Saphir
(Reuters) – The Federal Reserve’s target range for the federal funds rate could be kept at its current level “for some time,” which will likely be enough to keep inflation in check even if a rate hike is not excluded if necessary, Fed Board of Governors member Michelle Bowman said Tuesday.
“Inflation in the United States remains high and I still see a number of upside risks that affect my outlook,” the monetary policy official said in remarks prepared for a speech in London.
Inflation fell last year thanks to easing tensions on supply chains and an increase in labor supply due to immigration, two one-off factors, he said. she adds.
Regional conflicts could put upward pressure on energy and food prices, while looser financial conditions or fiscal stimulus could fuel inflation, Michelle Bowman said.
Immigrant housing demand and ongoing labor market tensions could also push up prices.
“If new data indicate that inflation is moving sustainably closer to our 2 percent target, the federal funds rate should be lowered gradually to prevent monetary policy from becoming too tight,” she said.
However, the economy is “not yet” at this stage, warned the official who “will remain cautious” and predicts that the central banks of other countries will ease their rates before the Fed.
Since the beginning of the year, there has been only “modest progress” in terms of inflation, with the official saying she expects “inflation to remain high for some time”.
“Going forward, I will closely monitor new data to determine whether US monetary policy is tight enough to bring inflation back to our 2% target,” added Michelle Bowman.
Michelle Bowman is one of the most restrictive members of the Fed’s Board of Governors.
(Ann Saphir report, French version Corentin Chappron, edited by Blandine Hénault)
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