Some Fed members have recently shown increased concern about the stress on the financial system (from factors such as a recessionary outlook and the recent string of bank failures) in public remarks, which could lead them to support putting a pause on pushing interest rates next month. However, in a speech given at a recent banking conference at the European Central Bank in Frankfurt, Germany, Fed governor Michelle Bowman made it clear that even though interest rates have surpassed the current rate of inflation, interest rates haven’t been pushed high enough.
Bowman is not convinced that inflation is actually dropping, and if it is, it isn’t falling fast enough. “Inflation remains much too high, and measures of core inflation have remained persistently elevated, with declining unemployment and ongoing wage growth,” she said. Despite the sentiment that economic turmoil from recent bank collapses would convince the Fed to halt their campaign to raise rates, Bowman insists that interest rates will need to loom high enough “for some time” in order to slow the economy down enough to finally yank inflation back to normal.
Going into the Fed’s next meeting, which is scheduled for June 13-14, Bowman has said that she “will continue to closely monitor the incoming data as I consider the appropriate stance of monetary policy.” It is safe to say that everyone in the business world, particularly those in the real estate industry, will be monitoring any public statement from the Fed closely as well.