Fed's Bowman Urges Cautious Policy Approach Amid Persistent Inflation and AI Risks

Federal Reserve official Michelle Bowman signaled caution regarding future interest rate adjustments, warning that the central bank still has work to do to restore price stability. Bowman estimated that core Personal Consumption Expenditures inflation likely reached 3.3% in October, propelled by energy costs and AI-driven demand. While forecasting inflation will approach the 2% target next year, she stressed that AI demand risks and Middle East tensions must ease before inflation declines sustainably. Bowman favored a gradual, wait-and-see policy stance, noting tightened financial conditions and warning that an AI investment shortfall could trigger an equity market correction.