Fed’s Bowman Joins Waller In Supporting Near-Term Rate Cut On Labor Market Risks

Federal Reserve Governor Michelle Bowman said on Monday that she favors an interest rate cut, provided inflationary pressures remain muted until the next policy meeting in July.

“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market,” Bowman said in prepared remarks in Prague, adding that she will continue to monitor economic conditions. 

U.S. stocks were higher on Monday despite the country entering Israel’s war against Iran over the weekend. The SDPR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.28% in midday trade. Meanwhile, the SPDR Dow Jones Industrial Average ETF (DIA) was up 0.11% and the Invesco QQQ Trust Series 1 (QQQ), which tracks the tech-heavy Nasdaq 100, was up 0.4%. 

Bowman is the second central banker to hint at a rate cut in July. Last week, Federal Reserve Governor Christopher Waller told CNBC that inflation is no longer a primary economic concern, making it possible for his colleagues to relax their stance on interest rates.

“If you’re starting to worry about the downside risk labor market move now don’t wait. Why do we want to wait until we actually see a crash before we start cutting rates?” he said in the interview.

Like Waller, Bowman believes that interest rates should be cut since policy uncertainty from tariffs has diminished and is now tilting towards potential labor market weakness. 

“I think it is likely that the impact of tariffs on inflation may take longer, be more delayed, and have a smaller effect than initially expected, especially because many firms frontloaded their stocks of inventories,” Bowman said. “As we think about the path forward, it is time to consider adjusting the policy rate.”

Their comments come as Trump has been pressuring the Federal Reserve to lower rates as a way to save costs on some of the country’s expanding national debt. Ahead of the Fed’s policy meeting last week, the President called Federal Reserve Chairman Jerome Powell “stupid” and demanded at least a 200-basis-point cut.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read also: Fed Governor Waller Says Rate Cuts Could Come In As Soon As July