Comments from the Fed’s Bowman
Thursday, 23/06/2022 | 15:00 GMT-0
23/06/2022 | 15:00 GMT-0
- Another 75 bps appropriate in July and hikes of at least 50 bps at “next few subsequent meetings”
- Further hikes may be needed after that, depending on how economy evolves
- I am committed to bringing real Fed funds back into positive territory
- Makes sense to eventually sell Fed’s MBS holdings
- Labor shortages will likely persist in many sectors
- Global supply chain issues continue as China covid lockdowns slow production
- Need to use Fed tools to address inflation before expectations become entrenched
These are strong comments. 75 bps gets the Fed to 2.25-2.50% at the next meeting. Hikes of 50 bps at “next few meetings” could be seen as at least 3 meetings, which would get to 3.75% -4.00%.
Right now, the Fed funds market is pricing in a peak in the 3.25-3.50% range as the focus shifts to growth.