Final Step in Policy Recalibration

Michelle Bowman, a Governor of the United States Federal Reserve, has voiced her endorsement for the December rate decision, describing it as the concluding phase in the policy recalibration process.

Adjustments and Expectations

Speaking in Laguna Beach, California, Bowman noted that following a 100-basis point reduction in the target range since September, the current policy rate is nearing her estimate of its neutral level, which she believes to be higher than pre-pandemic levels. Despite this, Bowman highlighted the ongoing challenges in reducing inflation and the robust conditions of the economic activity and labor market.

Looking Ahead

"The upcoming months are crucial for gaining insights into the new administration's policies and the lasting impact of inflationary pressures from 2024, influenced by private spending decisions and a noticeable acceleration in the expenditure of existing federal government appropriations in recent months. Understanding how these elements will shape economic activity and inflation in the future is paramount," Bowman emphasized.