According to Fed Governor Michelle Bowman, the central bank will likely continue raising interest rates until inflation is under control. In its last two policy meetings, the Federal Reserve raised benchmark borrowing rates by 0.75 percentage points, the largest increase since 1994. The moves were intended to reduce inflation at its highest level in more than four decades. In addition to the hikes, the rate-setting Federal Open Market Committee indicated that “ongoing increases … will be appropriate,” a view Bowman said she endorses. “My view is that similarly sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” she added in prepared remarks in Colorado for the Kansas Bankers Association.
Bowman’s remarks are the first by a member of the Board of Governors since the FOMC approved the latest rate increase last week. According to multiple regional presidents, rates will continue to rise aggressively until inflation falls from its current rate of 9.1% annually. Based on Friday’s jobs report, which showed a 528,000 increase in jobs in July and a 5.2% rise in wages, both higher than expected, markets are pricing in a 68% chance of a third consecutive move of 0.75 percentage points in September, according to CME Group data. Bowman stated that she would closely monitor inflation data in the coming weeks to determine the precise amount at which rates should be raised. Despite this, she noted that the recent data cast doubt on hopes that inflation has peaked.