Fed's Bowman Urges Caution on Interest Rates Amid Persistent Inflation and AI Risks

Federal Reserve Governor Michelle Bowman advocates a cautious, wait-and-see stance on further interest rate adjustments as persistent inflation pressures broaden across the economy. While Bowman noted the central bank still has work to do, estimating October core PCE inflation rose 3.3% due to energy prices and AI demand, she warned of risks from tightened financial conditions. Bowman projected core PCE will approach the 2% target next year, but highlighted that potential shortfalls in AI investment returns could trigger an equity market correction, dampening consumer spending and weighing on economic activity.