Fed Governor Bowman warns against hiking interest rates due to inflation spike
Federal Reserve Governor Michelle Bowman cautioned against raising interest rates to address the current spike in prices.
With inflation running well above the central bank’s 2% target, markets are expecting the Fed to stay on hold this year then possibly start raising rates in early 2027.
The policymaker noted that research shows that when reacting to temporary energy shocks, policy should not be overly aggressive, as it would add unwarranted policy restraint, weighing unnecessarily on economic activity and labor market conditions.
The remarks come one day after the Commerce Department reported that the personal consumption expenditures price index rose 3.8% in April and 3.3% when excluding food and energy prices.