Fed’s Bowman: US economy still needs ‘multiple’ rate hikes

Fed Governor Michelle Bowman cautioned that numerous rate hikes may be necessary to return inflation to healthy levels in two speeches she gave on Saturday and Monday.

Bowman, a senior Fed official, is pushing back against growing hopes on Wall Street that the central bank could be nearly done raising interest rates. In a pair of speeches on Saturday and on Monday, Fed Governor Michelle Bowman warned that multiple rate hikes could be required to get inflation back to healthy levels.

“We have made progress in lowering inflation over the past year, but inflation is still significantly above” the Fed’s 2% target, Bowman said on Monday at an event in Atlanta.Bowman, one of the more hawkish members of the Fed’s rate-setting committee, highlighted that the job market “continues to be tight, with job openings still far exceeding the number of available workers.”

“Given these developments, 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.

By contrast, many investors and some leading economists have been predicting the Fed will raise interest rates just one more time, or perhaps none. After Friday’s NFP report showing that hiring in July wasn’t too hot, but also not too cold, Goldman Sachs economists wrote in a note to clients that they continue to anticipate the Fed will “decide that a final hike is unnecessary” due to cooling inflation.