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Federal Reserve Governor Michelle Bowman says she supports ongoing 75 basis point interest rate hikes \u201cuntil inflation is on a consistent path to significantly decline,\u201d citing \u201ca significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles.\u201d The Fed governor a<\/strong>lso noted that crypto assets \u201ccould benefit from more regulatory clarity.\u201d<\/strong>\n<\/p>\n \n Referencing the Federal Open Market Committee (FOMC)\u2019s decision to raise the federal funds rate by 75 basis points during its July meeting, she expressed her support for the increase and the FOMC\u2019s view that \u201congoing increases would be appropriate at coming meetings.\u201d<\/p>\n Emphasizing her support for \u201ccontinued increases until inflation is on a consistent path to significantly decline,\u201d the Fed governor opined:\n<\/p>\n My view is that similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way.<\/p>\n<\/blockquote>\n \n She noted that inflation continued to climb in June, reaching 9.1% as measured by the consumer price index. \u201cThis is yet another concerningly high reading, and it set another 40-year record high despite the expectation of many forecasters that inflation had peaked earlier in the year,\u201d she described. Noting the lack of \u201cconcrete indications that support this expectation,\u201d she said:\n<\/p>\n I will need to see unambiguous evidence of this decline before I incorporate an easing of inflation pressures into my outlook.<\/p>\n<\/blockquote>\n \n Citing rising prices of food, housing, and energy negatively impacting Americans, she stressed: \u201cIt is absolutely critical that we continue to use our monetary policy tools until we are successful in returning inflation to our 2% goal.\u201d Bowman reiterated that the Federal Reserve has a duty to bring inflation down to 2% as mandated by Congress.<\/p>\n The Fed governor also pointed out that businesses are also suffering from elevated inflation through rising and volatile prices for inputs. Noting that she does not expect rents to decline anytime in the near future, coupled with high gas prices and continued inflation risk from motor vehicle prices, she cautioned:\n<\/p>\n I see a significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles.<\/p>\n<\/blockquote>\n \n Governor Bowman also mentioned cryptocurrency regulation in her speech, stating:\n<\/p>\n Another area that could benefit from more regulatory clarity is digital assets, including stablecoins and crypto assets.<\/p>\n<\/blockquote>\n \nFed\u2019s Bowman on Rate Hikes, Inflation, Crypto Regulation<\/h2>\n
\nFederal Reserve Governor Michelle W. Bowman discussed the U.S. economy and the Fed\u2019s efforts to fight inflation in a speech Saturday at the 2022 CEO & Senior Management Summit sponsored by the Kansas Bankers Association.<\/p>\n\n
\nBowman then explained her decision for supporting 75 bps interest rate hikes.<\/p>\n\n
\nShe then outlined some underlying causes of excessive inflation, such as \u201csupply chain issues, including those related to China\u2019s Covid containment policies, constrained housing supply, the ongoing conflict in Ukraine, fiscal stimulus, and limitations on domestic energy production.\u201d<\/p>\n\n
\nBowman also expects the Russia-Ukraine conflict to continue, adding that the effects of shipping disruptions of agriculture products and limits on energy supplies from Russia will remain a significant problem.<\/p>\n\n
\n\u201cSome banks are considering expanding into a range of crypto activities, including custody, lending backed by crypto collateral, and facilitating the purchase and sale of these assets for their customers,\u201d the Federal Reserve governor noted. \u201cIn the absence of clear guidance, banks should consult with their primary regulator and exercise caution when engaging with customers in these types of activities.\u201d<\/p>\n