(Bloomberg) — Federal Reserve Governor Michelle Bowman said she expects to support additional tightening of monetary policy to return inflation to the central bank’s goal.

“My baseline economic outlook continues to expect that we will need to increase the federal funds rate further to keep policy sufficiently restrictive to bring inflation down to our 2% target in a timely way,” Bowman said in a speech in Salt Lake City, Utah. “However, monetary policy is not on a preset course, and I will continue to closely watch the incoming data as I assess the implications for the economic outlook and the appropriate path of monetary policy.” 

Later in the speech, Bowman said: “I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation down to 2% in a timely way.” 

She has previously indicated support for raising rates further. Her stance has become more isolated among policymakers, who have coalesced around the idea of holding rates steady for some time, even as they remain open to hiking again if needed.

Bowman said she backed the decision by the US central bank’s policy-setting Federal Open Market Committee to hold interest rates at a 22-year high for a second straight meeting earlier this month. Chair Jerome Powell told reporters in a press briefing that it’s an open question whether the central bank would need to hike again, and that the Fed is “proceeding carefully,” an assessment that’s often suggested a reluctance to move rates in the near term.

“We should keep in mind the historical lessons and risks associated with prematurely declaring victory in the fight against inflation, including the risk that inflation may settle at a level above our 2% target without further policy tightening,” Bowman said.

Progress Unclear

The Fed governor cautioned that recent progress has been uneven and additional gains on inflation were unclear.

She noted that much of the improvement in inflation over the past year has come from the supply side, including increases in labor-force participation and lower energy prices, but that it was unclear whether the advances would continue to lower inflation.

Future gains in participation “may be limited, since prime-age labor-force participation is currently higher than pre-pandemic levels,” Bowman said. “It is also unclear whether all of the workers who retired or left the labor force during the pandemic will eventually return.”

Additional risks to inflation include higher services consumption, a lack of fiscal restraint and households’ significant excess savings, she said. 

Asked during a question-and-answer session with economists from the Gardner Policy Institute at the University of Utah what the “average” 2% target means, Bowman said that refers to the Fed’s 2020 framework and “as we’re looking at inflation, we feel strongly 2% is 2%, and it will continue to be 2% going forward.”

Bowman also raised the possibility that interest rates will need to remain higher over the long term than prior to the Covid-19 pandemic.

“Given potential structural changes in the economy, such as higher demand for investment relative to saving, it is quite possible that the level of the federal funds rate consistent with low and stable inflation will be higher than before the pandemic,” she said.

Investors expect the Fed is finished with its hiking campaign and will hold rates steady in a range of 5.25% to 5.5% when officials meet next month, amid recent reports showing inflation and some economic activity is cooling. The central bankers meet next on Dec. 12-13.