Colorado Springs, August 5, 2023 – Governor Michelle W. Bowman delivered a comprehensive speech on the state of the economy and the ongoing monetary policy at the 2023 CEO and Senior Management Summit and Annual Meeting, organized by the Kansas Bankers Association. The event, held in Colorado Springs, served as a platform for Governor Bowman, a former Kansas banker herself, to engage with financial leaders and discuss pertinent issues impacting financial institutions and local communities.

In her address, Governor Bowman highlighted recent developments and actions taken by the Federal Open Market Committee (FOMC) to address the current economic landscape. The FOMC had recently announced a 25 basis points increase in the federal funds rate target range, signaling a continued effort to tackle persistently high inflation. This move was part of a broader monetary policy tightening that began in March 2022.

Governor Bowman noted that these measures had yielded some positive results, with inflation showing signs of decline, particularly in core inflation figures that exclude volatile food and energy prices. Despite the tightening monetary policy, the economy demonstrated resilience, with a growth rate of over 2% in the first half of 2023, surpassing initial projections. This growth was underpinned by robust consumer spending and a resurgent housing sector, as evidenced by increased house prices and new housing starts.

The labor market, too, exhibited strength, boasting low unemployment rates and consistent job gains. Governor Bowman acknowledged a slight deceleration in job gains, indicating a convergence between labor demand and supply. However, she stressed that the demand for labor still outpaced availability, leading to upward pressure on prices.

Discussing the state of the banking system, Governor Bowman assured attendees that banks remained robust and adaptive. While lending standards had been tightened in response to higher interest rates, there were no signs of a significant contraction in credit that could impede economic activity. Lending to households and businesses continued to rise, albeit at a slightly reduced pace.

Governor Bowman expressed her support for the FOMC's decision to raise the federal funds rate target range in July, given the positive economic indicators and persistent inflation. She emphasized the importance of further rate increases to achieve the FOMC's 2% inflation target. However, she emphasized that the path of monetary policy was not set in stone and would be driven by incoming data.

In her closing remarks, Governor Bowman reiterated the central role of data in shaping policy decisions. She emphasized her readiness to advocate for additional rate hikes if progress towards inflation targets stalls. Restoring inflation to the 2% goal, she underscored, was vital for sustaining a robust labor market and a resilient economy.

Governor Bowman's address provided a comprehensive overview of the economic landscape, underscoring the FOMC's commitment to balancing inflation control with economic growth. As financial leaders continue to navigate these dynamics, the insights shared at this summit are poised to inform critical decisions in the months ahead.

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