Michelle Bowman, incoming vice chair for supervision at the US Federal Reserve, arrives for a Psaros Center for Financial Markets and Policy event at Georgetown University in Washington, DC, US, on Friday, June 6, 2025.
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Federal Reserve Governor Michelle Bowman said Monday she would favor an interest rate cut at the next policy meeting in July so long as inflation pressures stay muted.
In remarks for a speech in Prague, Bowman became the second central banker in recent days to suggest that President Donald Trump’s tariffs are likely to have a temporary and muted impact on prices, thus paving the way for lower rates.
“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,” she said in prepared remarks. “In the meantime, I will continue to carefully monitor economic conditions as the Administration’s policies, the economy, and financial markets continue to evolve.”
Bowman’s comments are similar to those from fellow Governor Christopher Waller, who told CNBC on Friday that he also thinks the Fed could consider cutting in July.
Trump has been pressuring the Fed to lower interest rates as a way to save financing costs on the nation’s ballooning national debt. However, the Federal Open Market Committee at its meeting last week voted to hold its key interest rate in a target between 4.25%-4.5%.
For her part, Bowman said she supported the change in approach the post-meeting statement took noting that policy uncertainty has diminished and the focus is now tilting toward potential labor market weakness.
Economists had worried that Trump’s tariffs would spike inflation, but measures have shown little if any impact so far. At the same time, the president has softened his rhetoric and opened the door to negotiations with major trading partners.
“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.”
Trump has said he thinks the Fed should lower by at least 2 percentage points. Bowman’s remarks did not mention how much she thinks the rate should be lowered, and Waller said there is no need for such dramatic cuts.
The FOMC next meets July 29-30. Traders are assigning just a 23% probability to a move at the meeting, with a likelihood of about 78% that the Fed will cut in September, according to the CME Group’s FedWatch gauge measuring futures market pricing.
