Fed: Upside risks to inflation still seen – Michele Bowman

Michelle W. Bowman, a member of the Board of Governors of the Federal Reserve (Fed), warned that there is a real risk that inflation will remain elevated for much longer than expected. During a speech at the Massachusetts Bankers Association Annual Convention in Key Biscayne, Bowman, a member of the Fed's Board of Governors, outlined a much more cautious approach to the Fed's current inflation outlook.

Main highlights:

• It remains unclear whether supply improvements will continue to reduce inflation.
• Monetary policy seems restrictive.
  “I see several upside risks to inflation in the outlook.”
• He continues to believe that inflation should decline slowly as long as monetary policy is maintained.
• He remains willing to raise rates further if data show that inflation growth has stalled or reversed.
• “I expect inflation to remain elevated for some time.”
• The magnitude of data revisions in recent years makes assessing the economy even more difficult.
• Geopolitical developments remain a key risk to inflation.
• Too lax financial conditions remain a risk, fiscal stimulus could drive demand upwards, stagnating or even reversing the advance of inflation.
• There remains a high risk that consumer conditions, increased immigration and labor market rigidities will lead to persistently high inflation.