Fed's Bowman says 'still work to do' on inflation
TLT•Federal Reserve Vice Chair Michelle Bowman said core PCE inflation likely rose 3.3% in October and forecast it would move closer to 2% next year. She said tighter financial conditions mean the benefits of further rate hikes must be weighed against their costs.
1. Inflation remains a priority
Bowman said inflation pressures are persisting, while labor market conditions appear to be firming, and that there is still work to do to bring inflation closer to 2%. She said core PCE inflation likely rose 3.3% in October, driven by higher energy prices and AI-related demand.
2. Risks to policy decisions
Bowman forecast core PCE inflation would move closer to 2% next year as pressures from the AI buildout and the Middle East conflict wane or unwind. She said falling stock prices, rising bond yields and a stronger dollar have tightened financial conditions, and the benefits of additional policy tightening must be weighed against costs for interest-rate-sensitive sectors.
