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Inflation may require higher Fed peak rate, governor says

Inflation may require higher Fed peak rate, governor says
Michelle Bowman does not rule out softer rate hikes in future meetings

By Ovunc Kutlu

ISTANBUL (AA) - Federal Reserve Governor Michelle Bowman said Thursday that record inflation in the US may require a higher peak interest rate level from the central bank.

"We would have a slightly higher rate than I had anticipated in September," she said at investment banking firm KBW's 9th Annual CEO Strategy Forum held in New York.

The Fed raised interest rates by 75 basis points Nov. 2 for a fourth consecutive time, raising the target range for the federal funds rate to between 3.75% and 4% -- its highest since January 2008.

Bowman, who is a voting member of the Federal Open Market Committee (FOMC) this year, said interest rates should remain high until she sees the actions of the FOMC having a significant effect on inflation.

The Fed governor, however, did not rule out softer rate increases in future meetings and said it will become appropriate for the FOMC "to slow the pace of rate increases" as it will try to figure out how high the target range would climb.

She also advocated that the Fed should hold the level of interest rate at its peak "for some time" until inflation returns to the central bank's 2% target.

source: News Feed
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