Federal Reserve Governor Michelle Bowman warned Monday that additional interest rate increases “will likely be needed.”
Bowman said although the U.S. has made “progress in lowering inflation over the past year,” the rate of inflation remains above the Federal Open Market Committee’s (FOMC) target of 2 percent.
She added the labor market “continues to be tight,” noting job openings exceed the number of workers.
“Economic activity has grown at a moderate pace, and even as banks have been tightening their lending standards in response to higher interest rates and funding costs, lending to businesses and households has continued to expand,” she said at a “Fed Listens” event in Atlanta.
“Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the FOMC’s goal,” she added.
The Fed raised interest rates last month for the 11th time since March 2022. It hiked its baseline interest rate range by 0.25 percent to a span of 5.25 to 5.5 percent.
Bowman said she will be “looking for evidence that inflation is on a consistent and meaningful downward path” to determine if future increases are needed.
“I know that high inflation has been a hardship, especially for lower — and middle-income families, who spend the majority of their income on necessities,” she said. “Returning inflation to 2 percent will help American families focus on important decisions other than inflation.”
“Addressing high inflation will ensure that it is no longer a factor for spending and investment decisions and will help put the U.S. economy on a course of ongoing economic growth and rising standards of living.”
The Fed will meet again in September to determine whether to raise rates again.