Fed's Bowman Sees No 'Urgent Need' For Further Rate Action, Wants Time To Assess After September Hike

• Bowman stressed evaluating the full set of incoming data while staying alert to risks.
• She said inflation remains above target, and officials need a clearer picture of economic trends and financial conditions.
• Natixis’ Christopher Hodge expects a final hike in December, not October, unless core CPI comes in around 0.4%.

Federal Reserve Vice Chair for Supervision Michelle Bowman said she does not currently see an urgent need for further interest-rate action, arguing that policymakers need time to assess the impact of the previous rate action.

Speaking at the IIF Annual Membership Summit in Bangkok on October 14, Bowman acknowledged that inflation remains above the Fed's target but said officials need a better understanding of underlying economic trends and evolving financial conditions.

"We have some time to wait and see how financial conditions evolve before we take more action," Bowman said, stressing the importance of evaluating the totality of incoming data while remaining attentive to risks.

Bowman Wants Time To Assess September Hike

The Federal Open Market Committee unanimously raised interest rates by 25 basis points in September, bringing the benchmark range to 3.75%–4.00%.

Bowman said earlier at an Atlantic Council event that the committee needed time to understand how that increase would work its way through the economy.

Asked whether her position differed from the Fed's median projection of one additional rate hike before year-end, Bowman reiterated that policymakers should first assess the effects of September's increase before deciding what further action might be necessary.

Williams Still Sees Another Hike As Possible

Meanwhile, New York Fed President John Williams told Bloomberg that another interest-rate increase this year may be appropriate.

"I haven't changed my view that it may be appropriate to have one more rate hike," Williams said. However, he currently sees no reason to believe the Fed would need to raise rates further after that, according to Bloomberg.

Bowman and Williams' comments come ahead of Wednesday's September Consumer Price Index (CPI) report, a key inflation reading before the Fed's October 27–28 policy meeting.

Analyst Sees Softer Core Inflation Ahead Of CPI

Natixis Chief U.S. Economist Christopher Hodge told Bloomberg that he expects the CPI report to show slightly softer core inflation than consensus forecasts.

Hodge's forecast broadly aligns with Williams' view that one more rate hike may be appropriate. Natixis expects a final hike in December, with no further increases afterward, Hodge told Bloomberg Television.

The analyst does not expect an October hike, although he suggested that an unusually strong, broad-based core inflation reading of around 0.4% could challenge that outlook.

U.S. Stock Futures Edge Higher

U.S. stock futures edged higher Wednesday as investors awaited the inflation report. S&P 500 futures gained 0.2%, while Nasdaq-100 futures were little changed. Dow Jones Industrial Average futures rose 213 points, or 0.4%, as of this writing.

On Stocktwits, retail investors’ sentiment was ‘bullish’ for the Invesco QQQ Trust (QQQ), SPDR S&P 500 ETF Trust (SPY) and SPDR Dow Jones Industrial Average ETF Trust (DIA), which track the Nasdaq-100, S&P 500 and Dow Jones Industrial Average indexes, respectively.

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