Fed' Bowman says prefers taper to begin in November
Michelle Bowman is a Governor of the Fed Board and thus a permanent voting member on the Federal Open Market Committee.
- very comfortable with starting to taper bond buys this year, preferably in November
- particularly concerned asset purchases are pushing up valuations, or continued easy Fed policy poses risks to inflation expectations
- benefits of Fed's asset purchases now likely outweighed by costs
- if expansion continues as expected, will support a pace of tapering that would end purchases by the middle of 2022
- expects steady progress toward Fed's inflation, employment goals in coming months
- Fed's tools not well suited to addressing labour supply issues
- Bowman says she does not expect employment to fully return to pre-pandemic levels any time soon, for reasons unrelated to monetary policy
- inflation readings will step down as supply bottlenecks resolved
- material risk that supply-related pricing pressures could last longer than expected
- wage increases, other investments in employees potentially add to inflationary pressures
- some bankers citing concerns about possible house price bubble, risks to financial stability
- If elevated inflation readings continue, we may see an imprint on longer-run inflation expectations.
- anchoring inflation expectations are an important condition for meeting monetary policy goals
November tapering continues to firm up. FOMC members all singing the same sort of song.