Fed official says time is right to cut interest rates

On January 8, Ms. Michelle Bowman, a member of the Board of Governors of the US Federal Reserve (Fed), said that the US monetary policy has been sufficiently effective in limiting the economy and she supports lowering interest rates when inflation decreases.

The Fed may need to raise interest rates again to curb inflation. (Source: Reuters)

“My view has changed as I consider the possibility that inflation could decline further with policy rates remaining at current levels for some time,” Bowman said in prepared remarks for the South Carolina Bankers Association Community Bankers Conference.

The comments mark a shift in stance from Ms. Bowman, who has long advocated tightening monetary policy.

The official previously said the Fed may need another rate hike to rein in inflation. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index, has fallen from a 40-year high in 2022 to around 2.6% by November 2023.

If inflation continues to move closer to the Fed's 2% target, it would be appropriate for the bank to start lowering interest rates so that monetary policy does not become too restrictive on the economy, according to Ms. Bowman.

Last month, the Fed kept interest rates unchanged in the range of 5.25-5.5%, where they have been since July last year.

The bank also signaled it could lower interest rates this year.

According to the minutes of the December 12-13 meeting, Fed officials debated adjusting monetary policy amid concerns about how long the economy could cope with high interest rates and when to stop reducing the size of its balance sheet.

Fed Chairman Jerome Powell stressed that the bank may have finished raising interest rates and expects to start lowering them by the end of 2024.

Source: https://baoquocte.vn/quan-chuc-fed-neu-thoi-diem-thich-hop-de-ha-lai-suat-256724.html