Fed's Bowman says 'still work to do' on inflation

What happened

Federal Reserve Vice Chair of Supervision Michelle Bowman said inflation pressures are persisting and there is still work to do to bring inflation closer to the Fed’s 2% goal. She said core inflation likely rose 3.3% in October, while expecting it to move closer to 2% next year as recent shocks fade.

Confirmed

Global impact / market context

Bowman’s remarks show that inflation remains a policy concern, but she did not call for interest-rate hikes. If inflation eases as she expects, pressure for further tightening could lessen; if it persists, borrowing costs may stay higher, weighing on business investment and household spending.

Analyst inference

She linked recent inflation pressure to higher energy prices and demand from AI investment, while saying the labor market is not driving the lack of progress. She also warned that falling stocks, rising bond yields and a stronger dollar have tightened financial conditions, potentially creating economic risks.

Confirmed

What to watch

1. Watch upcoming core personal consumption expenditures inflation readings, the measure Bowman cited, for evidence of whether price pressures are easing toward the Fed’s 2% goal. Analyst inference
2. Track whether energy prices and demand tied to AI investment fade, as Bowman expects; continued pressure from either could challenge her forecast for lower inflation next year. Analyst inference
3. Watch the Fed’s policy signals alongside stock prices, bond yields and the dollar, which Bowman said have tightened financial conditions and could pose risks to economic activity. Analyst inference

Evidence

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