Fed's Bowman: Monetary policy is now restrictive enough

Fed Governor Michelle Bowman has backed away from her hawkish view, saying she now sees monetary policy as sufficiently restrictive. She said inflation could ease toward the Fed’s 2% target if interest rates remain at current levels and offered potential support to lower borrowing costs if price pressures ease. “If inflation continues to approach our 2% target over time, it will eventually become appropriate to begin the process of lowering our policy rate to prevent policy from becoming overly restrictive,” Bowman said in prepared remarks to the South Carolina Bankers Association. “We’re not there yet,” Bowman said, adding that she was cautious given the upside risks to prices still linger. Bowman voted in December with other members of the Federal Open Market Committee to keep the benchmark policy rate steady at 5.25% to 5.5%. She has previously said inflation pressures could prompt further rate hikes. “I will remain cautious in my approach as we consider future changes in policy stance,” Bowman said. On Monday, Atlanta Fed President Raphael Bostic said inflation had fallen more than he expected and that the Fed was on track to meet its 2% target today. “The goal is to make sure we stay on track,” he said in a moderated discussion hosted by the Rotary Club of Atlanta, adding that policymakers could continue to allow monetary policy to remain restrictive.