Federal Reserve's Bowman outlines a "Practical Monetary Policy Decision-Making Framework": emphasizing a dual mandate and flexible response mechanisms

Deep Tide TechFlow News, May 29 — Federal Reserve's Bowman published an article systematically explaining her "Practical Monetary Policy Decision Framework," emphasizing that the Fed's interest rate policies should revolve around its dual mandate of maximum employment and price stability. She pointed out that the Fed mainly adjusts the financial environment through the federal funds rate, thereby influencing consumption, investment, and inflation paths. Bowman stated that her decision framework focuses on indicators such as GDP structure, the labor market (unemployment rate and wages), and PCE and core PCE inflation, combined with feedback from businesses and markets to reduce the risk of policy misjudgment caused by "lagging data."

Bowman believes that when inflation and employment goals may conflict, a more "flexible" balancing approach should be adopted rather than prioritizing one goal exclusively. She suggests that when identifying "transitory inflation shocks," policymakers should appropriately "see through the noise," but also remain vigilant about the secondary effects of ongoing conflicts on inflation expectations. She reiterated that policies need to maintain transparency and consistency to preserve the credibility and effectiveness of the Federal Reserve.