Federal Reserve governor Michelle Bowman said on Friday that rate cuts are still expected this year but added that future moves should that be cautious and gradual, with time to assess data, per Reuters.

Key takeaways

"Inflation is still elevated with upside risk."

"Still expecting inflation to moderate but need data to confirm that before more rate cuts."

"Current policy is in a good place for Fed to monitor data, be clear on economic impact of Trump administration policies before moving rates again."

"Not clear monetary policy is exerting much pressure on economy, with easy financial conditions and high asset prices possibly slowing progress on inflation."

"Watching long-term treasury yields as possible sign markets are expecting tighter policy will be needed to control inflation."

"Labor market not especially tight but wage growth still inconsistent with 2% inflation target."

"First quarter data important to how quickly inflation will improve going forward."

"Fragility of supply chains, geopolitical tensions, release of pent-up demand post election, other factors could also feed inflation."

Market reaction

The US Dollar Index holds its ground following these comments and was last seen posting small daily gains at 108.26.