Fed’s Bowman Says Economy’s Neutral Rate Higher Since Covid

Federal Reserve Governor Michelle Bowman said the neutral level for the central bank’s policy rate had likely risen since the Covid-19 pandemic.

Bowman said several factors that prevailed immediately after the pandemic’s onset, such as low borrowing costs and supportive fiscal policy, had allowed the US economy to remain on mostly solid footing even after the Fed aggressively raised interest rates in 2022 and 2023.