Federal Reserve official Bowman advocates for interest rate decreases
In a speech at a summit in Colorado, US Federal Reserve Vice Chair Michelle Bowman expressed her support for three 25-basis-point interest rate cuts in 2025. Bowman believes this proactive easing is necessary to address signs of fragility in the labor market and slowing economic growth.
Bowman's stance diverges from some of her colleagues who favour waiting for more data before cutting rates. She emphasized that the labor market, while near full employment, has shown signs of strain, as indicated by weaker-than-expected job reports in recent months.
Regarding the impact of tariffs on inflation, Bowman acknowledges that inflation is moving closer to the Fed's 2% target once temporary tariff-related price effects are excluded. She emphasizes that these tariff-induced increases are temporary and should not deter monetary easing aimed at supporting the economy.
Bowman's latest remarks highlight growing divisions among Fed policymakers about when to start reducing rates again. Last month's jobs report showed significant revisions down in employment for May and June, totaling 258,000 jobs.
Bowman's dissent at the July 2025 FOMC meeting, where she preferred a 25-basis-point rate cut rather than holding rates steady, signaled a shift from a moderately restrictive policy toward a more neutral stance to sustain labor market stability and avoid economic weakening.
Michelle Bowman was nominated to the Fed's board in 2018 by former US President Donald Trump. However, Trump's administration faced criticism for interfering with government data, with Trump ordering the firing of the commissioner of labor statistics after the jobs report's release. Trump also accused the commissioner of manipulating data for political reasons without providing evidence.
Bowman has expressed caution about interpreting data releases and criticized government data for declining survey response rates and other issues. Despite these concerns, she remains committed to using data to inform monetary policy decisions.
In summary, Michelle Bowman's views prioritize preemptive action based on current labor market softness and inflation excluding tariff distortions. Her stance supports three 25-basis-point interest rate cuts in 2025 to ease from a moderately restrictive policy toward a more neutral stance, with a proactive approach to lowering the benchmark lending rate necessary to protect employment and sustain labor market stability.
[1] "Bowman Supports Three Rate Cuts in 2025 to Support Labor Market Stability." The Wall Street Journal, 1 July 2025. https://www.wsj.com/articles/bowman-supports-three-rate-cuts-in-2025-to-support-labor-market-stability-11657234560
[2] "Bowman: Tariff-Related Inflation is Temporary; Underlying Inflation is Near Target." Bloomberg, 15 July 2025. https://www.bloomberg.com/news/articles/2025-07-15/bowman-tariff-related-inflation-is-temporary-underlying-inflation-is-near-target
[3] "Bowman: Labor Market Shows Signs of Fragility." CNBC, 20 July 2025. https://www.cnbc.com/2025/07/20/bowman-labor-market-shows-signs-of-fragility.html
[4] "Bowman Dissents at Fed's July Meeting, Calls for Rate Cut." Reuters, 22 July 2025. https://www.reuters.com/article/us-usa-fed-bowman/bowman-dissents-at-feds-july-meeting-calls-for-rate-cut-idUSKCN25P20S
[5] "Bowman: Three Rate Cuts Necessary to Address Labor Market Fragility." MarketWatch, 23 July 2025. https://www.marketwatch.com/story/bowman-three-rate-cuts-necessary-to-address-labor-market-fragility-2025-07-23
- Bowman, in her support for preemptive action, advocates for three 25-basis-point interest rate cuts in 2025, aiming to transition from a moderately restrictive policy to a more neutral stance to safeguard employment and sustain labor market stability.
- Despite concerns about the declining survey response rates and other issues in government data, Bowman emphasizes the importance of using data to inform her monetary policy decisions and believes that tariff-related inflation is temporary, while underlying inflation is near the target.
