On May 4th, Caixin News Agency (Editor Niu Zhanlin) - On Friday, Federal Reserve Governor Bowman stated that inflation may be on the rise; Quota; Within a certain period of time; Quota; It will still remain at a high level, but she expects that if interest rates remain at the current level, the rise in prices will eventually cool down.
Bauman is the first Federal Reserve official to speak up since Federal Reserve Chairman Powell's speech on Wednesday. She pointed out that the data shows that the decline in inflation rate by the end of 2023 is temporary, and it is expected that the inflation rate will remain high for a period of time.
At a meeting held in Florida, Bauman stated, "My basic expectation remains that inflation will eventually further decline while policy interest rates remain stable, but I still believe that some inflationary risks will affect my expectations."
She added that the current monetary policy stance seems to be at a restrictive level, but if the upcoming data shows a stagnation or reversal in inflation progress, she is still willing to raise the federal funds rate at future meetings.
Bauman also listed some inflationary risks, such as housing shortages in the face of continuously growing labor force (influx of new immigrants) and still strong wage growth.
Bauman stated last month that if the data continues to show that inflation is cooling, gradually lowering interest rates would be appropriate. But she avoided the topic of interest rate cuts in Friday's speech, saying, "I will remain cautious when considering changes in future policy positions."
After a series of economic data revealed the price upward pressure accumulating in the US economy, officials on Wednesday kept the federal funds rate target range unchanged at 5.25% -5.5%. Powell said, "We may need more time to have confidence that the path we are on is a sustainable one to reduce inflation.". He said he expects inflation to return to a downward trend this year, but also said, "My confidence in this is lower than before.".
In addition, the Federal Reserve, which is reducing its asset portfolio by $7.4 trillion, has approved a plan to slow down the pace of reduction to extend the process of gradually withdrawing from the emergency stimulus measures launched four years ago during the pandemic.
The non farm payroll report released on Friday should give the Federal Reserve a sigh of relief as the central bank hopes to easily achieve a soft landing for the US economy. Data shows that employers slowed down the pace of recruitment in April, with a 175000 increase in non farm employment last month, lower than the 240000 predicted by economists. The unemployment rate has risen to 3.9%, while the average hourly wage growth rate has declined to 0.2% month on month.
After Bauman, Chicago Fed Chairman Goolsby gave a speech, stating that the non farm payroll report provided him with comfort that the economy was not overheating, but he declined to disclose whether there was a possibility of interest rate cuts this year.
Gullsby acknowledges that the Federal Reserve has indeed encountered setbacks in inflation since the beginning of this year, so it needs to wait for some time. The Federal Reserve must ensure that recent inflation is not a sign of re acceleration.