Fed governor Michelle Bowman said she strongly supported the central bank’s 0.75-percentage-point rate increase last week.
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A Federal Reserve official said the central bank would need to raise interest rates aggressively this year in order to combat inflation.
Fed governor
Michelle Bowman
said she strongly supported the Fed’s 0.75-percentage-point rate increase last week and that she would favor raising the central bank’s benchmark rate by another 0.75 point, or 75 basis points, at the central bank’s next meeting, July 26-27.
“Based on current inflation readings, I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them,” Ms. Bowman said in remarks prepared for delivery Thursday at a banking conference in Harwich, Mass. She said that depending on how the economy responds, further increases may be warranted after that.
Ms. Bowman said she supported raising short-term interest rates so that—after adjusting them for inflation, or in “real” terms—they are no longer negative. Last week’s rate increase brought the central bank’s benchmark federal-funds rate to a range between 1.5% and 1.75%.
Ms. Bowman called for measuring the setting of interest rates against near-term inflation expectations, which certain surveys show are anywhere between 3% and 6%.
“Since inflation is unacceptably high, it doesn’t make sense to have the nominal federal-funds rate below near-term inflation expectations,” said Ms. Bowman. “I am therefore committed to a policy that will bring the real federal-funds rate back into positive territory.”
Write to Nick Timiraos at nick.timiraos@wsj.com
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