Inflation Alert! Fed Governor Michelle Bowman: “Inflation continues to be too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time”

Bowman calls out she is in the rates higher for longer camp while leaving room to continue raising rates.

She calls out the PCE index rising but fails to mention that it was being undercounted previously and is actually HIGHER going back the last two years and registered at 3.5% in August, still WELL above the 2% target.

Heck, excluding food and energy, it is at 3.9%!

Inflation is still growing and rates need to go higher for longer if the Fed is serious about taming it.

Source: https://www.federalreserve.gov/newsevents/speech/bowman20231007a.htm

TLDRS:

• Fed Governor Bowman: “Inflation continues to be too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way.”
• It also appears that Governor Bowman wants to be able to defer to the Reserve Banks when the public makes a comment challenging rules and is not consistent with their position.
• “the growing importance of nonbank lending suggest that monetary policy may have smaller effects on bank lending and the economy than in the past.”
• It seems so odd to have her readily admit that nonbank aka ‘Shadow Banks’ have neutered the Fed’s ability to render monetary policy.
• The nonbank financial system now controls $239 trillion, or almost half of the world’s financial assets, according to the Financial Stability Board.
• I believe inflation is the match that has been lit that will light the fuse of our rocket.

To me, the scariest thing she said is:

“the growing importance of nonbank lending suggest that monetary policy may have smaller effects on bank lending and the economy than in the past.“

It seems so odd to have her readily admit that nonbank aka ‘Shadow Banks’ have neutered the Fed’s ability to render monetary policy. The nonbank financial system now controls $239 trillion, or almost half of the world’s financial assets, according to the Financial Stability Board. That’s up from 42% in 2008, and has doubled since the 2008-09 financial crisis. Postcrisis regulations helped shore up the nation’s biggest banks, but the restrictions that were imposed, coupled with years of ultralow interest rates, fueled the explosive growth of nonbank finance, and now we have Governor Bowman admitting monetary policy is no longer working as intended.

Yikes…

https://dismal-jellyfish.com/fed-governor-bowman-on-inflation-nonbank-influence/