Federal Reserve director Michelle Bowman said today that the United States central bank will likely need to raise borrowing costs further to bring inflation back to its 2% target in a reasonable time frame.

“My basic economic outlook continues to expect that we will need to raise the federal funds rate to keep policy tight enough to bring inflation back down to our 2% target in a timely manner,” Bowman said in prepared remarks for an event in Salt Lake City, Utah.

Bowman has consistently been among a small minority of Fed officials who have argued that they do not believe the central bank’s work is done. She noted that inflation remains high, and progress is “uneven,” detailing in her comments the “unusually high level of uncertainty” about the economic outlook.

“It is not yet clear whether a further easing in supply of goods and labor will continue to reduce inflation, given higher consumer spending, higher energy prices, and potential new labor shortages in the coming years related to the trend of bringing more manufacturing back from abroad,” Bowman said.

For the Fed director, some signs of insensitivity to interest rates among businesses could blunt the effects of tighter monetary policy and financial conditions on economic activity and inflation, and broader economic conditions may mean the Fed’s policy rate may need to be higher than pre-pandemic norms.

“In my view, given potential structural changes in the economy, such as increased demand for investment relative to savings, it is quite possible that the level of the federal funds rate consistent with low and stable inflation is higher than before the pandemic,” Bowman said.

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