Federal Reserve Governor Bowman: Inflation remains to be controlled, but the costs of further tightening policy need to be weighed.

BlockBeats news, November 11 — Federal Reserve Vice Chair for Supervision Michelle Bowman said that inflationary pressures remain persistent, while the labor market is stabilizing, and there is still room for inflation to fall further. She expects core PCE to rise to 3.3% year-over-year in October, driven mainly by higher energy prices and AI-related demand, but the lack of progress on inflation is not caused by an overheated labor market. Bowman expects that as the AI construction boom and pressures from Middle East conflicts gradually fade, core PCE is expected to move toward 2% next year. On policy, Bowman noted that recent declines in stock prices, rising U.S. Treasury yields, and a stronger dollar have already tightened financial conditions, while the economy has strengthened this year.

She stressed that financial conditions have already tightened. Against this backdrop, the benefits of further monetary policy tightening must be carefully weighed against the costs imposed on interest-rate-sensitive sectors. Whether AI demand can be sustained and how geopolitical risks evolve will be important factors determining the direction of monetary policy in the coming months. She did not explicitly call for a rate hike, but emphasized that the Fed still needs to bring inflation back to its 2% target.