Michelle Bowman

  • 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

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 at a peak in the 3.25-3.50% range as the focus shifts to growth.