Federal Reserve Governor Bowman: Progress towards inflation target appears to have stalled

Fed Governor Bowman on Wednesday expressed unease about cutting interest rates while inflation remains above the 2 percent target, adding more color to her call for further cautious rate cuts. "We are readjusting policy, but we are not yet on target for inflation, and that worries me," she said. Bowman said progress toward the Fed's 2 percent goal looks to have stalled as inflation remains high, "and I am inclined to cautiously lower policy rates to better assess how far we are from the finish line, while recognizing that we are not yet on target for inflation and keeping a close eye on the evolution of the labor market." She argued that the neutral policy rate is much higher than it was before the COVID-19 pandemic, and that the Fed is not in any position to cut rates again, as the market currently expects. She also said that the greater risk to the Fed is the price stability objective, although a deterioration in labor conditions is also possible.