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Two Federal Reserve officials, Governor Michelle Bowman, and Boston Fed President Susan Collins, voiced their support on Friday for maintaining elevated interest rates in the ongoing battle against persistently high inflation. In separate speeches, both policymakers acknowledged the possibility of further rate hikes if economic data does not align with their goals. Governor Bowman emphasized that progress has not effectively curbed inflation to meet the Fed’s 2% target. She stated, “I continue to expect that further rate hikes will likely be needed to return inflation to 2% in a timely way,” during her prepared remarks in Vail, Colorado. Echoing similar sentiments, President Collins expressed optimism regarding recent inflation data but highlighted that it’s premature to claim victory, particularly due to the elevated core inflation excluding shelter costs. She emphasized that rates may need to remain higher for an extended duration, acknowledging that further tightening remains possible.

Their comments come shortly after the Federal Open Market Committee (FOMC) decided not to raise rates in its recent meeting. However, they hinted at the likelihood of one more increase later this year, followed by potential cuts in 2024. The federal funds rate currently lies within a range of 5.25% to 5.5%. President Collins noted that while there are signs of moderating inflation and a rebalancing economy, progress has been uneven across various sectors. She highlighted the delayed impact of monetary policy moves due to the strong financial positions of consumers and businesses. In conclusion, both officials emphasized the importance of closely monitoring economic indicators and being prepared to take further measures to achieve the Fed’s mandate while navigating the complexities of the current economic landscape.

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