In a speech on Thursday, Fed Governor Bowman made it clear that the Fed must act "prudently and carefully" as policymakers work to get closer to the Fed's 2% inflation target.

Bowman further pointed out her belief that the Fed needs to keep interest rates at current levels for "an extended period of time" after delivering a carefully prepared speech. The Fed governor had already predicted last week that inflation would remain high for some time.

In a speech in Arlington, Texas, Bowman emphasized: "It is critical to maintain our credibility in fighting inflation, and we must act cautiously to achieve our 2% inflation target."

"I think we need to hold on for a while longer," she added. "If we don't make clear progress in controlling inflation, then I think we really need to think carefully about our next strategy."

This week, several policymakers have called for keeping interest rates high for longer. Boston Fed President Collins said that it may take "more time and effort than previously expected" to get inflation down to the 2% target on a sustained basis, while Minneapolis Fed President Kashkari noted that interest rates may remain high for "a relatively long period of time."

The Federal Reserve decided last week to keep its benchmark interest rate at its highest level in more than 20 years, a move that has remained unchanged since July last year. Fed Chairman Jerome Powell said after the decision that recent inflation data did not strengthen the committee's confidence that the pace of price increases is slowing to 2%. He did not say when the Fed would consider cutting interest rates.

In an interview with the Texas Bankers Association, Bowman also specifically mentioned the risks of commercial real estate (CRE), especially office properties, as more employees choose to work remotely due to the impact of the new crown epidemic.

"Some banks have seen an increase in delinquency rates on CRE loans, although overall delinquency rates remain at low levels," she noted. "We may see lower property prices, reduced cash flow from rental income, or other situations that could hurt some banks' CRE loans or portfolios, especially if these loans mature and are refinanced at higher rates."

Bowman also pointed out the signs of reduced liquidity in the U.S. Treasury market, adding: "Ultimately, liquidity conditions in the U.S. Treasury market may amplify or dampen the shock to the financial system."

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