Fed’s Bowman: Inflation risks remain rate cuts expected but data-dependent

January 31, 2025 at 01:39PM

Inflation still elevated with upside risk

Still expect inflation to moderate but need data to confirm that before more rate cuts

Rate cuts still expected this year but future moves should be cautious and gradual with time to assess data

Current policy in a good place for Fed to monitor data, be clear on economic impact of Trump administration policies before moving rates again

Fragility of supply chains, geopolitical tensions, release of pent-up demand post election, other factors could also feed inflation

First quarter data important to how quickly inflation will improve going forward

Labor market not especially tight but wage growth still inconsistent with 2% inflation target

Watching long-term Treasury yields as possible sign markets are expecting tighter policy will be needed to control inflation

Not clear monetary policy is exerting much pressure on economy, with easy financial conditions and high asset prices possibly slowing progress on inflation

Bowman is the hawk at the Fed and these comments aren’t exactly staking out a truly hawkish position.

This article was written by Adam Button at www.forexlive.com.