Michelle W Bowman: Remarks on the economic outlook and financial inclusion
Remarks by Ms Michelle W Bowman, Member of the Board of Governors of the Federal Reserve System, at the Alaska Bankers Association, Anchorage, Alaska, 20 August 2024.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Good morning. It is really a pleasure to join you here in Alaska. Getting outside of Washington, D.C. and hearing about the unique issues that affect Alaskans provides valuable insights that inform my work at the Federal Reserve. A part of the mission of the Federal Reserve is to support an economy that works for everyone. Consumers and communities are more successful when they have access to financial products and services that meet their needs. While many of these products and services are available online, as Alaskans know better than most Americans, geography and location are also important. This access often looks very different in places with many remote and rural communities. Today, I will discuss the Federal Reserve's work to promote a more inclusive financial system, including our work on financial inclusion for Indigenous communities. Before diving into those topics, I will share my current views on the economy and monetary policy.
Economic and Monetary Policy Outlook
Over the past two years, the Federal Open Market Committee (FOMC) has significantly tightened the stance of monetary policy to address high inflation. At our July meeting, the FOMC voted to continue to hold the federal funds rate target range at 5-1/4 to 5-1/2 percent and to continue to reduce the Federal Reserve's securities holdings.
After seeing considerable progress last year, in recent months we have seen some further progress on lowering inflation. The 12-month measures of total and core personal consumption expenditures (PCE) inflation, which I prefer to the more volatile higher-frequency readings, have moved down since April, although they have remained somewhat elevated at 2.5 percent and 2.6 percent in June, respectively. In addition, the latest consumer and producer price index reports indicate that 12-month core PCE inflation likely remained a bit above 2.5 percent in July. The progress in lowering inflation since April is a welcome development, but inflation is still uncomfortably above the Committee's 2 percent goal.
Prices continue to be much higher than before the pandemic, which continues to weigh on consumer sentiment. Inflation has hit lower-income households hardest, since food, energy, and housing services price increases far outpaced overall inflation over the past few years.