According to Bloomberg News, Federal Reserve Governor Michelle Bowman supports an increase of March interest rate. He has said that while it is too early to tell whether it will be a 50 basis point that is a question for the officials to discuss.
Federal fund rate increase and its possible impacts
Bowman stated that she supports raising the federal fund rate in the next meeting in March. If the economy emerges and evolves as per expectations, it would be appropriate to increase rates in the coming months.
Bowman said that she, along with the other colleagues, will keep a tab on the data so that it can be judged to decide the appropriate size increase at the meeting scheduled to be held in March, she said while speaking to American Bankers Association Community Banking Conference on Monday in Palm Desert, California.
US central bankers are facing the hottest inflation in 40 years and intend to get started on eliminating pandemic policy support. And this they wish to do so by increasing rates from near zero, thereby beginning to shrink the bloated balance sheet, although there are differing views on the extent of aggressiveness with which they must act.
Bloomberg News reports that they have stepped up efforts on increasing rates after the consumer prices data showed a rise of 7.5% through January as employers added on to approximately half a million more-labor force in the labor market where presently the rate of unemployment at 4%. Central bankers are slated to get price pressures related to new readings and employment for February before the meeting in March.
Senior Fed officials Governor Lael Brainard nominated as vice-chair, and John Williams, New York Fed President Friday, expressed that they are all set to move in March. However, Williams was of the view against a half-point move, stating that he does not see any reason to take giant strides right at the beginning.
Bloomberg News reports that the following officials meet on March 15-16. In January, policymakers had concluded that there would be a surge in rates soon at the gathering. They were alert about persistent inflation that would give them a reason for faster tightening, as per minutes released from the February 16th session.
Speculations are rife that Fed would start with a half-point move was fueled by hawkish comments from James Bullard, Fed chief of St Louis. However, Bowman did not clarify where she stood. However, she made it clear that she is open to taking aggressive actions if needed.
Since the Fed’s meeting in January, data has said that there has been an increase in urgency to get the process started for normalizing the interest rates stance and reduce the size of the Federal Reserve’s balance sheet significantly.
