- Persistent inflation, firming labor conditions suggest ‘still work to do’
- Financial conditions have tightened, Fed must weigh costs of additional policy tightening
- Bringing inflation down remains a priority
- Core PCE likely rose 3.3% in October on energy prices, AI-related demand
- As shocks unwind, forecast core PCE to move closer to 2% next year
- Economic growth gained momentum this year
- CPI data suggests inflation pressures may persist
- Labor market has improved, not tight, not adding to inflation
It’s funny how all the people who turned to doves in order to bid for the Fed Chair nomination are now pivoting back to being hawks because their party lost the midterms in large part due to deteriorating affordability.
Overall, she hasn’t performed the full 360, back into the hawk she started out as, but she’s moving in that direction. The body of the remarks is still laced with off-ramps: labor isn’t adding to inflation, shocks will unwind on their own, core PCE drifts toward 2% next year, and — the real tell — financial conditions have tightened enough that the Fed “must weigh the costs” of going further.
That’s the language of someone who’ll vote for the next hike reluctantly and look for the exit the next time stock markets gap down. Note the direct contradiction with Logan on labor: Bowman says improved-not-tight, Logan says balanced-and-tightening. That’s a committee split on the output gap itself, not just tactics. With 27.7 bps priced this year, Bowman neither confirms nor fights it, but she’s the clearest signal yet that the hiking bloc isn’t monolithic.
I have a hard time taking any of them seriously on the inflation front right now after they all just opted to hold when oil was $15 higher.
This article was written by Adam Button at investinglive.com.