(Bloomberg) -- Federal Reserve Governor Michelle Bowman repeated her expectation that inflation will continue to decline further with interest rates held at their current level, but said it's too soon to begin rate cuts.
Bowman said she'll be closely monitoring incoming data to assess the appropriate path for policy and flagged several risks that could add to inflation pressures, including spillovers from geopolitical conflicts, loosening financial conditions and continued labor market tightness.
“Should the incoming data continue to indicate that inflation is moving sustainably toward our 2% goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive,” Bowman said in prepared remarks for the Florida Bankers Association on Tuesday. “In my view, we are not yet at that point.”
In her comments on monetary policy, which closely resembled remarks given earlier this month, Bowman warned that cutting interest rates too soon could necessitate rate hikes in the future.
“While the current stance of monetary policy appears to be at a restrictive level that will bring inflation down to 2% over time, I remain willing to raise the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed,” she said.
On the regulatory front, Bowman repeated her call for “significant revisions” to a July proposal to require banks to increase their capital levels.
She also raised concerns about plans to lower caps on the fees banks and payment companies can charge merchants when consumers swipe their debit cards, as well as officials' stance on bank mergers. Bowman added that regulators should look to make the Fed's discount window more efficient.
--With assistance from Ben Bain.
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