Bowman Warns Fed Against Rate Hikes on 3.8% Inflation Spike

4 articles · Updated · CNBC · May 29

Michelle Bowman said the Fed should not raise rates to counter the current inflation jump, arguing energy-driven price spikes are temporary and tighter policy would unnecessarily hurt growth and jobs.
At a Reykjavik conference, she pointed to research showing policy should not be overly aggressive in response to energy shocks, even with headline inflation still well above the Fed's 2% target.
Commerce Department data released Thursday showed the PCE price index rose 3.8% in April, or 3.3% excluding food and energy, while the Dallas Fed's trimmed-mean measure ran closer to target at 2.3%.
Bowman said her stance could change if the conflict with Iran drags on and broadens inflation pressures, but she backed keeping guidance in the latest Fed statement that the next move could still be a cut.
Markets are pricing virtually no chance of rate cuts through at least 2027 and see the Fed staying on hold this year before a possible hike in early 2027.

With the Fed deeply divided, can its monetary policy withstand a prolonged Mideast conflict and historic oil shock?

Markets are betting on a swift end to the Iran conflict. What happens to the global economy if they're wrong?