Federal Reserve Governor Michelle Bowman states inflation reduction has paused, citing Middle East conflict’s potential impact on energy prices.
Federal Reserve Governor Michelle Bowman indicated that progress in lowering inflation has stalled, despite the central bank’s current ‘moderately restrictive’ monetary policy. She emphasized the need for clarity on how the Middle East conflict might affect energy prices and broader economic conditions, warning that prolonged disruptions could pressure inflation later this year.
Bowman noted the U.S. economy has remained resilient but cautioned against overreacting to temporary energy shocks, which could weigh on growth. She expressed optimism that a resolution to the conflict could ease energy market volatility, though she stressed the risks grow the longer the war persists. The Fed’s April decision to maintain an easing bias was described as appropriate given current uncertainties.
Markets have reacted to rising energy price volatility as the duration of the Middle East conflict remains uncertain. Bowman reiterated that the Fed can tolerate short-term energy shocks if its commitment to inflation control remains credible.