Federal Reserve Governor Michelle Bowman was reported by Reuters on Monday to have ''flagged a range of economic and financial stability risks posed by the housing market, particularly noting that rising demand and a slow pace of construction are putting upward pressure on prices.''
She also said that we are likely to see higher inflation from housing for a while.
"The supply of new homes has been held back by shortages of materials, labor, and developed lots," Bowman said in remarks prepared for delivery to a Women in Housing and Finance gathering. "I anticipate that these housing supply issues are unlikely to reverse materially in the short term, which suggests that we are likely to see higher inflation from housing for a while."
Reuters also reported that she said, there are risks, most notably posed by nonbank mortgage companies, whose loans could pose some risks to the broader financial system because they cannot tap government backstops. Better data collection and stronger oversight of such companies "is appropriate," Bowman said, adding that she is concerned that nonbank and bank mortgage lenders are subject to different levels of oversight.
Market implications
There is little here that will directly impact forex on the knee-jerk but the inflation risks remain priced in. The Fed last week continued to lean on the transitory mantra which has weighed on the greenback in recent sessions:
