Fed’s Bowman Warns Extended Energy Shock Could Shift Policy to Tightening

Federal Reserve Vice Chair for Supervision Michelle Bowman said on May 29, 2026, that a prolonged energy shock from the Middle East conflict could broaden inflation pressures and force a shift toward tighter monetary policy. She noted the current benchmark rate is 3.50%-3.75% ahead of the June 16-17 meeting, and while she supports keeping language that the next move is a cut, persistent disruptions into the second half of the year could change her risk assessment. A sustained energy surge has already pushed officials to back away from rate-cut forecasts, with markets now pricing a hike as the next step, though not imminent. Bowman added that looking through temporary energy-driven inflation is appropriate if the Fed’s commitment to its 2% target remains credible and one-off tariff effects wane, but warned that reacting prematurely would add unwarranted restraint on the resilient economy.