for release on delivery 12 : 15 p. m. edt ( 10 : 15 a. m. mdt ) august 6, 2022 fighting inflation in challenging times remarks by michelle w. bowman member board of governors of the federal reserve system at 2022 ceo & senior management summit sponsored by the kansas bankers association colorado springs, colorado august 6, 2022 thanks to the kansas bankers association for the invitation to share my perspective on the economy and bank regulation. it is always a pleasure to be here with you for this annual gathering. i am especially looking forward to hearing what is on your minds about supervision and regulation, how you are navigating current economic conditions, and your expectations going forward. i ’ ll start with a recap of the decision from july ’ s federal open market committee meeting and then move on to my thoughts about the current economic uncertainty and challenges that lie ahead. the number one challenge, of course, is inflation, which continues to be much too high, and a heavy burden for households and businesses. as i ’ m sure you all already know, the federal open market committee decided last week to raise the federal funds rate by 75 basis points, to a range of 2¼ to 2½ percent. i will share my reasoning for supporting this increase and why i support continued increases until inflation is on a consistent path to significantly decline. i will then touch on the current federal regulatory climate and the fed ’ s agenda for supervision. inflation continued to climb in june, reaching 9. 1 percent as measured by the consumer price index. this is yet another concerningly high reading, and it set another 40 - year record high despite the expectation of many forecasters that inflation had peaked earlier in the year. i have seen few, if any, concrete indications that support this expectation, and i will need to see unambiguous evidence of this decline before i incorporate an easing of inflation pressures into my outlook. many of the underlying causes of excessive inflation are the same as they have been over the past year or so — supply chain issues, including those related to china ’ s - 2covid containment policies, constrained housing supply, the ongoing conflict in ukraine, fiscal stimulus, and limitations on domestic energy production. regardless of the source of the inflationary pressure, the federal reserve has a duty to bring inflation down to our 2 percent target. this duty is mandated by congress to carry out monetary policy that results in price stability — meaning low and stable inflation. we all understand why this

may have limited the extent to which households increased their savings as a precaution against the possibility of future job loss. structural adjustments but the response of policy and the emerging recovery should not obscure the fact that structural adjustments need to occur in our economy. the banking system faces a significant for more information see the box on page 29 of the august inflation report. challenge to wean itself off the current substantial levels of official support and to return to a position in which it can lend normally. households may need to re - evaluate their financial positions in the face of the more uncertain economic environment. and the need for a substantial reduction in the fiscal deficit is clear. monetary policy cannot and should not prevent those adjustments from happening. they are necessary for the long - run health and stability of our economy. rather, the job of monetary policy is to ensure that these adjustments occur in as orderly a manner as possible and within an economic environment which is consistent with hitting the 2 % inflation target. prospects for 2010 and beyond so what does the next year hold in store? the economy appears to have turned. although output is estimated to have contracted in the third quarter of this year, there is a range of evidence from business surveys, from the bank ’ s regional agents, and from recent indicators that the economy has begun to stabilise and that we are likely to be moving into a period of renewed expansion. whenever an economy is in recession, especially a recession as deep as this one, it can be hard to see where growth will eventually come from. however, as i have discussed, the easing in monetary and fiscal policy is providing considerable support to the emerging recovery. that stimulus is reinforced by the substantial depreciation of sterling. sterling is around a quarter below its mid - 2007 level and – as many of you here today will know from your own experiences – this has helped to improve the ability of uk companies to compete in both overseas and domestic markets. output will also receive a further fillip as the adjustment of inventories by companies runs it course. however, the on - going structural adjustments that i mentioned are likely to give rise to a number of economic headwinds that may impede the recovery. credit conditions are likely to remain tight for some time as banks repair their balance sheets. and the need for public and household finances to adjust to the changed economic environment will weigh on spending. balancing these factors, my view of the outlook for gdp growth is in line with the projections contained in the bank ’ s