In a recent speech given at the National Association for Business Economics, Federal Reserve Governor Michelle Bowman stated that there is still more work to be done in bringing down inflation.
According to Bowman, “Inflation has been running below our 2% objective for some time, and while the recent increase in prices has brought us closer to that goal, we still have more work to do to ensure that inflation is consistently at or close to 2%.”
The Fed has a long-standing goal of keeping inflation at or around 2%, as this is considered to be a healthy level for the economy. However, inflation has been persistently below this target in recent years, which has led to concerns about potential deflation and a lack of growth.
In her speech, Bowman also discussed the role that the Fed plays in promoting maximum employment and stable prices, stating, “The Fed’s dual mandate is to promote maximum employment and stable prices, and we take that responsibility seriously. We will continue to use our tools and resources to support economic growth and to ensure that inflation is at or close to 2%.”
The Fed has taken a number of actions to try to boost inflation, including cutting interest rates to near zero and launching several rounds of quantitative easing, in which the Fed purchases large amounts of Treasury bonds and other securities in order to inject money into the economy.
Despite these efforts, inflation has remained stubbornly low, which has led some to question the effectiveness of these measures. Bowman acknowledged this, saying, “We know that these actions have not yet fully achieved our goals, but we will continue to use all of the tools at our disposal to support the economy and bring inflation to 2%.”
Bowman also mentioned that the Fed is closely monitoring the recent increase in prices, particularly in the areas of food, energy, and used cars, as they are significant drivers of inflation.
“We will continue to closely monitor these trends and any other factors that may be influencing inflation,” she said. “We will also be closely monitoring the progress of the economy as a whole and any potential risks to our goals.”
Overall, Bowman’s speech reinforced the Fed’s commitment to its dual mandate of maximum employment and stable prices, and its determination to use all available tools to bring inflation to 2%.