Fed governor supports more rate hikes to lower inflation

US Federal Reserve Governor Michelle Bowman on Friday supported more interest rate increases in order to lower inflation.

"Inflation is still 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% goal in a timely way," she said during her speech at Independent Community Bankers of Colorado.

"Most recently, the latest inflation reading based on the consumer price index showed that overall inflation rose, responding in part to higher oil prices," she added.

In June last year, annual consumer inflation in the US soared to 9.1%, but the Fed's total of 11 rate hikes since March 2022 pushed it down to 3% in June this year. With rising oil prices acting as a major contributor, inflation came in at 3.2% in July and climbed to 3.7% in August.

The national average stood at $3.859 per gallon for regular gasoline as of Friday, up 4.7% from $3.684 a year ago, according to figures from the American Automobile Association.

"I see a continued risk that energy prices could rise further and reverse some of the progress we have seen on inflation in recent months," Bowman said.

"I continue to expect that further rate hikes will likely be needed to return inflation to 2%," she added.

The Fed on Wednesday skipped an interest rate hike for the second time this year, keeping the federal funds rate unchanged between the 5.25%-5.5% target range, the highest in 22 years.

The central bank expects an additional rate hike in one of its two remaining meetings this year, while it indicated fewer rate cuts for next year, according to its projection materials released Wednesday.

Bowman is a voting member of the Federal Open Market Committee this year.