Cautious monetary policy approach highlighted amid resilience in US economy
US Federal Reserve (Fed) officials underscored significant economic uncertainties and persistent inflation risks, pointing to these factors as key reasons for maintaining a cautious stance in monetary policy decisions.
Fed board member Michelle Bowman said the US economy remained resilient through the end of last year, marked by notable growth in activity and a labor market close to full employment.
“However, core inflation remains elevated, and I continue to see upside risks to inflation,” she said on Thursday.
Bowman highlighted that last month's rate cut was the final step in recalibrating the Fed's monetary policy, stressing that ongoing inflation risks necessitate a cautious approach in future decisions.
Boston Fed President Susan Collins, speaking Thursday at NAIOP Massachusetts, said the overall economy is performing well.
Collins noted that monetary policy is well-positioned to remain steady if inflation does not rise further or to ease sooner if needed, emphasizing that a patient, steady, and comprehensive policy approach is essential.
Philadelphia Fed President Patrick Harker said the Fed is currently on a downward trajectory with interest rates, but the pace will depend on incoming data.
“We are not talking about a potentially long pause, but let's see how things shape up as there is a lot of uncertainty,” Harker said during his address to the National Association of Corporate Directors New Jersey Chapter's Economic Forecast 2025 on Thursday.
