Fed Governor Michelle Bowman warns against hiking interest rates because of inflation spike

Michelle Bowman, vice chair for supervision at the US Federal Reserve, during the Federal Reserve Board Community Bank Conference in Washington, DC, US, on Thursday, Oct. 9, 2025. Eric Lee | Bloomberg | Getty Images Federal Reserve Governor Michelle Bowman on Friday cautioned against raising interest rates to address the current spike in prices. With inflation running well above the central bank's 2% target, markets are expecting the Fed to stay on hold this year then possibly start raising rates in early 2027. Current pricing is indicating virtually no chance of cuts anytime through at least 2027. But Bowman said adjusting policy to offset energy-driven inflation surges has proven ineffective. "Reacting to temporarily elevated energy price inflation would add unwarranted policy restraint, weighing unnecessarily on economic activity and labor market conditions," the policymaker said at a conference in Reykjavík, Iceland. Bowman added that research shows that when reacting to temporary energy shocks, "policy should not be overly aggressive." The remarks come one day after the Commerce Department reported that the personal consumption expenditures price index — the Fed's benchmark inflation gauge — rose 3.8% in April and 3.3% when excluding food and energy prices. However, measures that strip out extremes in components within the gauges show inflation running closer to target. The Dallas Fed's "trimmed mean" inflation index puts the 12-month rate at 2.3%. …