US FOMC Member Bowman Speaks

It is an honor to return to St. Louis for the 12th year of the Community Banking Research Conference.1 This conference is a model of effective partnership between the Federal Reserve and the Conference of State Bank Supervisors, and more recently, the Federal Deposit Insurance Corporation (FDIC). It is an opportunity for us all to dig deeper into the community banking model and the important role of community banks now and into the future. Together, regulators work to ensure that the approach to supervision and regulation is fit for ...

Good morning. I would like to thank the Georgia Bankers Association for the invitation to join you today for your annual conference.1 I appreciate the opportunity to share my views on the U.S. economy and monetary policy before we engage on community banking issues and other matters affecting the banking industry. In light of last week's Federal Open Market Committee (FOMC) meeting, I will begin my remarks by providing some perspective on my vote and will then share my current views on the economy and monetary policy. In order to address high inflation, for more than two years, the FOMC increased and held the federal funds rate at a restrictive level. At our September meeting, the FOMC voted to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent and to continue reducing the Federal Reserve's securities holdings. post: FED'S BOWMAN DELIVERS NEAR IDENTICAL REMARKS ON MONETARY POLICY AND ECONOMIC OUTLOOK AS SHE DID ON SEPT. 26 AT EVENT IN DALLAS, TEXAS

post: FED'S BOWMAN: DATA POINTS TO CONTINUED ECONOMIC STRENGTH.

Good morning. I would like to thank the Kentucky Bankers Association for the invitation to join you today for your annual convention. I appreciate the opportunity to share my views on the U.S. economy and monetary policy before we engage on community banking issues and other matters affecting the banking industry. In light of last week's Federal Open Market Committee (FOMC) meeting, I will begin my remarks by providing some perspective on my vote and will then share my current views on the economy and monetary policy. In order to address high inflation, for more than two years, the FOMC increased and held the federal funds rate at a restrictive level. At our September meeting, the FOMC voted to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent and to continue reducing the Federal Reserve's securities holdings. post: FED’S BOWMAN: DISSENT TO HALF-POINT CUT WARRANTED BY INFLATION STILL ABOVE TARGET, “MEASURED” PACE OF CUTS MORE APPROPRIATE post: BOWMAN: CORE INFLATION REMAINS “UNCOMFORTABLY ABOVE” 2% TARGET, WITH UPSIDE RISKS GIVEN ONGOING GROWTH IN SPENDING, WAGES post: BOWMAN: THERE ARE STILL MORE JOBS THAN AVAILABLE WORKERS BOWMAN: RISE IN UNEMPLOYMENT LARGELY DUE TO SLOWED HIRING AND IMPROVING SUPPLY post: FED'S BOWMAN: THE RISE IN UNEMPLOYMENT IS LARGELY DUE TO SLOWED HIRING AND IMPROVING SUPPLY.

Thank you for the invitation to join you. Given the recent conclusion of the Board's stress test, it seems timely to share my thoughts on the stress testing program. In the past, I have noted reservations about the stress testing process, so today I'd like to discuss in greater detail the benefits, challenges, and issues I would like to see resolved as the stress testing program evolves in the future. Earlier this summer, the Board announced the results of the supervisory stress tests. At a high level, all 31 banks subject to the test remained above their minimum common equity tier one (CET1) capital requirements from the hypothetical recession scenario.3 Under this scenario, banks would have absorbed projected hypothetical losses of nearly $685 billion, and would have experienced an aggregate CET1 capital decline of 2.8 percent.4 The hypothetical scenario included a 40 percent decline in commercial real estate prices, a substantial increase in office vacancies, a 36 percent decline in house prices, a spike in unemployment to a peak of 10 percent, and related declines in economic output.5 This year also saw the introduction of "exploratory" stress scenarios, which included two different funding stress scenarios, and for a subset of banks, included two trading book loss scenarios.6 The Board's press release announcing the results reported that large banks are well positioned to weather a severe recession and remain above minimum capital requirements.7 More recently, the Fed announced the final individual capital requirements for all large banks, effective on October 1, 2024.8 The firm-specific capital requirements are "informed by" the stress test results, and include a 4.5 percent minimum capital requirement, a stress capital buffer that is set at a minimum of 2.5 percent, and if applicable, a capit post: FED'S BOWMAN: CONCERNS FOR STRESS TESTS INCLUDE VOLATILITY & TRANSPARENCY.

I'd like to thank everyone for joining us today to celebrate the achievements of Texas community partnerships. I am so excited to be a part of this important milestone, marking the end of the pilot round of Advance Together and to announce a second round for this initiative. Back in 2021, during the depths of COVID, I took part in the Dallas Fed's Advance Together launch event, welcoming the awardees into the initiative and looking ahead to their success. This is truly a special opportunity to recognize the progress and achievements ...