Federal Reserve Governor Michelle Bowman has stated that the Federal Reserve should not consider cutting interest rates yet, citing the continued risk that inflation may remain sticky or increase. Bowman made these comments during a speech in London, where she emphasized that reducing rates too quickly could cause inflation to surge. Bowman also stated that she is willing to raise interest rates if progress on inflation stalls.

Bowman's comments reflect the prevailing sentiment at the central bank, where most policymakers have stated that they need more evidence before making any decisions about interest rates. Recent readings have shown moderating inflation, but the rate-setting Federal Open Market Committee has noted that progress on inflation has been modest. Bowman has also highlighted upside risks that could accelerate her outlook, including the inflow of new migrants to some regions, which could result in upward pressure on rents.

Bowman expects inflation to remain elevated for some time, and her outlook is among the most hawkish of all policymakers. She has stated that she will remain cautious in her approach to considering future changes in the stance of policy, given the risks and uncertainties regarding her economic outlook. The Commerce Department is set to release its reading on the May personal consumption expenditures price index, the Fed's preferred inflation gauge, and economists expect a 12-month inflation rate of 2.6% on both the all-items and core.

Bowman's comments have been echoed by other policymakers, including San Francisco Fed President Mary Daly, who has rejected the idea of a preemptive cut to hedge against deterioration in the labor market and a slowing economy. Chicago Fed President Austan Goolsbee has also stated that if he sees more months of good inflation data, then he would question whether policy needs to be as restrictive as it has been, paving the way for cuts.

The Federal Reserve's stance on interest rates has significant implications for the economy, and Bowman's comments suggest that the Fed will maintain its current stance for some time. While some economists expect inflation to return to 2%, the Fed's preferred inflation gauge, others have highlighted the risks of a prolonged period of high inflation. As the economy continues to evolve, the Fed's decisions on interest rates will be closely watched by investors, policymakers, and consumers alike.