Fed Director Michelle Bowman

(Reuters) – The Federal Reserve is expected to slow down its rate hike to assess the impact of its tightening cycle, but inflation remains very high and central bank monetary policy should be tight enough for some time to contain increase, Fed Director Michelle Bowman said on Thursday.

“Modeling the pace and level of interest rate hikes will allow us to better understand the impact of our … actions and their impact on economic activity,” Bowman said at a financial services event in New York.

Bowman, who has advocated faster action to curb inflation than some of his peers, however, said last month’s inflation data, while showing a slight easing in price pressures, “is still unacceptably high.”

Bowman said that until she sees central bank action having a significant impact on price pressure, she looks forward to raising her estimate of where rates will need to rise to a “slightly higher” level than she expected in September. meeting. The average assessment of Fed politicians at this meeting was 4.6%.

Once at the appropriate level, the Fed will not rush to cut rates, she said.

“I expect the benchmark interest rate to remain tight enough for some time to reduce or restore price stability, which in turn will help create the conditions for strong and resilient labor markets,” Bowman said, echoing arguments made by Fed Chairman Jerome. Powell on Wednesday.

(Reporting by Lindsey Dunsmuir)

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