Fed’s Bowman warns CPI signals persistent US inflation pressures

Federal Reserve (Fed) Governor Michelle Bowman said that “bringing inflation down remains a priority,” and that “CPI data suggests inflation pressures may persist.”

In remarks made at the Council on Foreign Relations, Bowman commented that economic growth has gained momentum, that the labour market has improved and does not add to inflation and that longer-term inflation expectations are “very well anchored.”

Key takeaways:

Persistent inflation, firming labor conditions suggest still work to do

Financial conditions have tightened, the Fed must weigh the 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

Focused on financial stability risks if AI returns fall short

Labor market has improved, not tight, not adding to inflation

AI development increasingly backed by external funding

Longer-term inflation expectations are very well anchored.

Inflation expectations are an important data point, but they are not necessarily controlling how I think about things.

I would need to see AI and Middle East risks abate before I could be confident inflation will come down next year

The Fed is trying to gather data on AI debt counterparties

Open lines of communication with the Treasury are critically important

I don't think AI will rob the US economy of jobs

AI will make workers more productive, create new jobs, and eliminate less-necessary jobs

The Fed does ongoing cybersecurity examinations of banks, and has seen a great deal of focus on identifying and patching vulnerabilities

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.51%	0.73%	0.52%	0.48%	0.87%	0.51%	0.72%
EUR	-0.51%		0.21%	0.02%	-0.03%	0.35%	0.01%	0.21%
GBP	-0.73%	-0.21%		-0.23%	-0.25%	0.14%	-0.21%	0.00%
JPY	-0.52%	-0.02%	0.23%		-0.03%	0.35%	0.00%	0.20%
CAD	-0.48%	0.03%	0.25%	0.03%		0.39%	0.03%	0.24%
AUD	-0.87%	-0.35%	-0.14%	-0.35%	-0.39%		-0.35%	-0.14%
NZD	-0.51%	-0.01%	0.21%	-0.00%	-0.03%	0.35%		0.20%
CHF	-0.72%	-0.21%	-0.00%	-0.20%	-0.24%	0.14%	-0.20%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.