(Bloomberg) -- Federal Reserve Governor Michelle Bowman said she wants to see additional progress on inflation before the central bank lowers interest rates further, and questioned how restrictive policy might be given the economy’s strength.
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“I would like to see progress in lowering inflation resume before we make further adjustments to the target range,” Bowman said Friday in prepared remarks for the New England CEO Summit.
Bowman voted with the Federal Open Market Committee Wednesday to hold the central bank’s policy rate steady in a range of 4.25% to 4.5%. Fed Chair Jerome Powell said at his press conference that the policy setting is “very well calibrated” to keep the labor market near full employment and to guide inflation lower.
He also described policy as “meaningfully restrictive” — something Bowman said is unlikely.
“In light of the ongoing strength in the economy and with equity prices substantially higher than a year ago, it seems unlikely that the overall level of interest rates and borrowing costs are exerting meaningful restraint,” she said.
Without mentioning President Donald Trump, Bowman said the current policy setting “also provides the opportunity to review further indicators of economic activity and get clarity on the administration’s policies and their effects on the economy.”
“It will be very important to have a better sense of the actual policies and how they will be implemented, in addition to greater confidence about how the economy will respond,” Bowman said.
The economy expanded at a 2.3% annualized pace in the fourth quarter, powered by strong consumption. The rate of inflation remains high, rising 2.9% last year as measured by the consumer price index. Bowman noted in her speech that she had not seen the December figures for the Fed’s preferred inflation gauge.
The so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.2% last month and 2.8% from a year earlier, according to data out Friday.
Bowman said she does think inflation will slow further this year, but that progress may be “bumpy and uneven.” That said, she continues to see upside risks to inflation and noted that price stability remains a larger concern than the labor market at this time.