On Friday, Federal Reserve Governor Bowman, who has the right to vote in the Federal Reserve's FOMC, said that she believes it is inappropriate for the Federal Reserve to cut interest rates in 2024, and pointed out that the pressure on US inflation continued in the first few months of this year.

Regarding the Economic Forecast Report (SEP) submitted by Federal Reserve officials every quarter, Bauman revealed in an interview:

As far as I am concerned, the 2024 interest rate cut has not been included in my economic forecast. I still expect to maintain current interest rates for a longer period of time, which is still my basic position.

Bauman said that after several months of disappointing inflation data, it will take longer for her to be confident that inflation will return to the 2% target, which is a prerequisite for cutting interest rates. “So my expectation is that after a few months of progress, there will probably be a few more meetings before I feel comfortable cutting interest rates.

She also said that there is an exception to her interest rate policy expectations, that is, if an economic shock occurs, then it will cause the Federal Reserve to resolve this issue through monetary policy.

Bauman urged the Fed's policymakers to act carefully and carefully as they move towards the 2% inflation target. “Most importantly, we need to be careful to meet the 2% target to maintain our credibility in the fight against inflation.”

Bauman believes that the US economy has positive momentum, and points out that consumer spending has always been strong.

In his speech, Bauman also emphasized the risks of commercial real estate in the US, especially office buildings, as more people work remotely due to the COVID-19 pandemic. She said that although delinquency rates have generally remained low, commercial real estate loan delinquency rates at some banks have increased:

We may see a decline in the value of real estate, a decrease in cash flow from rental income, or other conditions that may impair the value of certain bank commercial real estate loans or portfolios, particularly if those loans mature and are refinanced at higher interest rates.

In its semi-annual report released on the same day, the Federal Reserve warned of a rise in the overdue rate of commercial real estate loans. The Federal Reserve said that as the overdue rate of office-related loans continues to rise, banks are preparing for further losses. The overdue rate on some commercial real estate loans has soared to pre-COVID-19 levels. The focus of Federal Reserve officials is to improve the speed, strength, and flexibility of regulation as appropriate.

Bowman also mentioned signs such as low liquidity in the US Treasury bond market. She said that in the end, the liquidity of the US Treasury bond market may amplify or mitigate the impact on the financial system.

Since this week, many senior Federal Reserve officials have said that it will take longer to maintain high interest rates. On Friday alone, a number of officials spoke intensively:

• Dallas Federal Reserve Chairman Logan said that given the disappointing inflation data so far this year, it is still too early to consider cutting interest rates, and there is uncertainty about how restrictive the Fed's policy is now. “I need to see some of the uncertainties on the road resolved. We need to maintain a very flexible policy and continue to monitor the data that will be released to see how the financial situation evolves.” Logan also mentioned that it is hoped that all banks will obtain and test the application of the discount window tool.
• US Federal Reserve Chairman Bostic said on Friday that the Federal Reserve is still expected to cut interest rates this year and is expected to cut interest rates by 0.25 percentage points this year. Bostic is a senior Federal Reserve official who threw cold water on interest rate cuts many times this year.
• US Richmond Federal Reserve Chairman Barkin said that the current US economic situation requires the Federal Reserve FOMC to think carefully and be patient in monetary policy actions. With proper monetary policy, US inflation will fall back to 2% over time. I would like to see the progress of inflation continue and be widespread. Demand in the US economy is steady, but not hot.
• US Federal Reserve Chairman Kashkari said that in a wait-and-see model, he will check whether the progress made in reducing US inflation has come to a standstill. He mentioned that it is possible to slow the growth rate of the US economy, or to embrace immigrants. Science and technology allow workers to participate in the job market for a longer period of time.
• Chicago Federal Reserve Chairman Goolsbee said that the FOMC monetary policy is relatively restrictive. If a rebound in inflation means overheating, everything must be done to reduce inflation to 2%. The housing market remains a major inflationary challenge. We have experienced fluctuations in inflation and are now on the sidelines, but there isn't much evidence that US inflation has stagnated at 3%. For the Federal Reserve's FOMC, what matters is long-term inflation expectations, not short-term inflation expectations.

After the hawkish speeches of senior Federal Reserve officials, particularly Governor Bowman, US bond yields then accelerated.