Fed Governor Bowman Wants Inflation to Cool Off Before Playing with Interest Rates Amid Trade Shenanigans

Federal Reserve Governor Michelle Bowman declared on Monday that she needs a little more peace of mind that inflation is on a downward slide this year before she starts fiddling with interest rates again, especially with all the hoopla surrounding the Trump administration's latest trade antics.

"I'd really like to feel more confident that we're making headway in taming inflation before we start tweaking things," Bowman quipped in her prepared speech for an American Bankers Association shindig, alluding to the Fed's rate that's chilling in the 4.25% to 4.5% zone. 

The benchmark interest rate "is sitting pretty right now, giving the crew some time to kick back and watch how the inflation drama unfolds," she pointed out, giving a nod to the Fed's policy-setting Federal Open Market Committee.

Keeping rates steady for a moment "also lets us peek at some other economic tea leaves and figure out just what the administration's policies are up to," she added.

"We've got to get a better grip on these policies, how they're rolling out, and feel more sure about how the economy's gonna react in the next few weeks and months," she stressed.

Since he took office again last month, President Donald Trump has been on a roll with trade orders and tariffs, but sometimes he's done a little backtracking and undoing of those tariffs. 

Appointed by Trump during his first rodeo, Bowman has been one of the fiercest inflation hawks at the Fed. She shared her hopes for inflation to slow its roll this year, with a report on the personal consumption expenditures price index (minus those pesky food and energy costs) expected to show a dip from 2.8% in December to 2.6% in January. The PCE is the Fed's inflation darling.

The predicted inflation rate is still playing hard to get with the Fed's 2% target, and Bowman noted that the current 4% unemployment rate is lower than her idea of full employment, while wages are climbing at a pace that's throwing shade on the central bank's inflation goals.

Inflation "seems to be getting back on its downward path, and my main guess is that it'll keep cooling off this year," she stated. However, she admitted, "there are some wild cards...for the inflation journey."

The Fed is expected to keep the benchmark interest rate on ice at its upcoming March meeting as policymakers take a front-row seat to watch the effects, especially of the import tariffs Trump has been tossing around.