Fed's Bowman: More rate increases 'will likely be needed' to lower inflation

Federal Reserve Governor Michelle Bowman said Monday morning that she expects to raise interest rates despite cooler reports on jobs and inflation recently.

"I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the FOMC’s goal," Bowman said at a Fed Listens event at the Atlanta Fed.

Michelle Bowman, a Federal Reserve governor. (Photo by Horacio Villalobos#Corbis/Corbis via Getty Images) (Horacio Villalobos via Getty Images)

Last month, Fed officials raised interest rates for the 11th time since March 2022 in what may be the first of two rate hikes that officials have penciled in for the remainder of the year.

Wall Street is betting that July's rate hike will mark the Fed’s last before holding rates at the current level into the first half of next year.

Going forward, Bowman says she will be looking for evidence that inflation is on a consistent and meaningful downward path as she considers whether to raise rates further and how long rates will need to remain at a sufficiently restrictive level.

While Bowman says she’s encouraged by the recent inflation readings from the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Price Index, she says that inflation still remains well above the Fed’s 2% target.

When it comes to the job market, Bowman said July’s cooler jobs report showed signs that supply and demand for workers is coming into better balance. But the demand for workers continues to exceed the supply of available job seekers, she said, adding upward pressure on prices

Elsewhere, New York Fed President John Williams also told the New York Times in an interview that supply and demand in the job market are coming back into better balance and that the Fed is pretty close to the peak on rates.

"To me, the debate is really about: Do we need to do another rate increase? Or not? Now, that could change, depending on the data," Williams said.

New York Fed President John Williams, left, with Fed Chair Jerome Powell, right, in 2018. (AP Photo/Jonathan Crosby) (ASSOCIATED PRESS)

"I think we’re pretty close to what a peak rate would be, and the question will really be — once we have a good understanding of that, how long will we need to keep policy in a restrictive stance, and what does that mean?"

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