Not yet at the point where it is appropriate to cut rates.Should data show inflation moving sustainably to 2%, it will eventually become appropriate to gradually lower policy rate.Baseline outlook continues to be inflation will return to 2% with policy rate held steady for some time.Willing to raise the target rate at a future meeting if inflation progress stalls or reverses. Will remain cautious in approach to future changes in policy stance.Other central banks may ease monetary policy sooner or more quickly that the Fed.Only modest further progress on US inflation seen this year.Expect US inflation to remain elevated for some time. Still see a number of upside inflation risks.US labour market remains tight despite some further rebalancing.
Bowman is a known hawk, so these comments are not surprising. The market sees a total of 48.8 bps of easing by the end of the year (basically 2 cuts) with 90% probability of no change at the upcoming meeting at the end of July.
A lot will depend on the next inflation data. I think the Fed will be more dovish if we get a good inflation report in July. Then, if we get some more good figures in August, Fed Chair Powell will likely pre-commit to a rate cut in September at the Jackson Hole Symposium.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
