Federal Reserve Vice Chair for Supervision Michelle Bowman said Thursday she does not currently see an urgent need for further rate adjustment. Speaking after a speech on lessons from the Fed's recalibration of the enhanced supplementary leverage ratio, Bowman said policymakers should take time to understand economic trends and the effects of the September hike before making further changes, adding that inflation remains above the central bank's target. Her comments followed similar remarks from Fed Governor Philip Jefferson, who said earlier Thursday he needs more time to assess the next step, and New York Fed President John Williams, who said Tuesday he saw no urgency for another rate hike. Last month the Federal Open Market Committee raised the federal funds rate target range by 25 basis points to 3.75%-4.00%, its first hike in three years. With at least three FOMC voters in no rush for another increase, the probability of a hike at the October meeting dropped to 26.0% on Thursday from 68.6% a week ago, according to the CME FedWatch tool, while the odds of a 25-bp hike in December rose to 63.2% from 39.0%.
Bowman and other FOMC voters see no urgent need for further rate hikes, lowering near-term hike odds and pushing the expected policy rate path down.
Dovish Fed commentary reduces the odds of near-term rate hikes, pulling the 10-year Treasury yield lower.
