Bowman and Daly comments on Fed policy and US economy 💵

5:40 PM September 22, 2023

Mary Daly and Michele Bowman of the Federal Reserve commented today on the US economy. Daly's statement - where one could see more uncertainty and 'satisfaction' with the effects of Fed policy so far - was decidedly more dovish compared to Bowman, who signaled support for more than one more rate hike, signaling that current policy overall may still not be restrictive enough when looking at the economy expansion pace.

Fed Daly

  • We don't know whether we should hold interest rates or do more. 
  • We won't be satisfied until we are sure that inflation is returning to a path back to stability.
  • I'm not ready to declare victory but the labor market is gradually cooling. We've had good data readings for the last few months, inflation is falling.
  • Keeping interest rates this week doesn't determine what we do next but we need to go slower.
  • We are holding rates to gather information and see if further increases are really needed. We have not raised them, recognizing that we are closer to the target.
  • The U.S. economy is on a roll and has favorable momentum. The labor market is still tight but its cooling bodes well for inflation
  • We see signs that demand is slowing somewhat in response to higher interest rates

Fed Bowman

  • I expect that progress on inflation is likely to be slow under current conditions, suggesting the need for even tighter policy.
  • he economy continues to grow at a solid pace, with solid consumer spending and solid job growth.
  • In order to return inflation to 2% in a timely manner, Fed policy will need to be maintained at restrictive levels for some time.
  •  Bank lending standards have tightened, but there are no signs of a sharp contraction in lending that would significantly slow the economy.
  • I see signs of improvement in the supply-demand balance in the labor market. I will accept an interest rate hike if inflation is too high.

Source: xStation5

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