(Bloomberg) -- Federal Reserve Governor Michelle Bowman said she wants to move cautiously on further interest-rate cuts because progress in reducing inflation has slowed.
“I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labor market,” Bowman said in remarks to the Forum Club of the Palm Beaches in West Palm Beach Florida Wednesday.
Bowman voted against the Fed’s half-point cut in September — the first such dissent by a Fed governor on the monetary policy committee in almost two decades — preferring a smaller move. She voted with her colleagues for a quarter-point reduction this month, which brought the benchmark lending rate to a range of 4.5% to 4.75%.
Futures traders are pricing the chance of another cut next month at somewhat above 50%. Bowman’s remarks suggest she may not go along with that move if the labor market remains strong while inflation progress falters.
“We have seen considerable progress in lowering inflation since early 2023, but progress seems to have stalled in recent months,” Bowman said in the text of her remarks. “We should also not rule out the risk that the policy rate may attain or even fall below its neutral level before we achieve our price stability goal.”
She noted that the 12-month measure of core personal consumption expenditures price index, the Fed’s preferred inflation gauge, “has moved sideways at around 2.7% since May.” Preliminary data suggests progress will also be limited in October, she said.
Elsewhere in her remarks, Bowman was critical of the regulatory response to bank failures in early 2023 including the collapse of Silicon Valley Bank.
“A crisis is not a regulatory blank check,” she said. “Promoting safety, soundness, and financial stability should not devolve into an exercise of regulatory allocation of credit — picking winners and losers — or promoting an ideological position through more open-ended processes like bank supervision and examination.”
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