Within the Fed, a Split Emerges Over Rate Cuts

As debate intensifies inside the Federal Reserve, a second top official has publicly called for interest rate cuts as early as next month. Michelle Bowman, the Fed's vice chair for supervision, said Monday that the time has come to consider lowering rates, as inflation is easing and signs of weakness are emerging in the labor market. In a speech in Prague, Bowman said she would support a rate cut at the Fed's next meeting if inflation stays in check, joining Fed Governor Christopher Waller, who made a similar case last week, per the New York Times.

Their comments contrast with the stance of Fed Chair Jerome Powell, who has urged patience as the impact of President Trump's tariffs come into focus. Powell said after last week's Fed meeting that the labor market is still solid and not "crying out for a rate cut," warning that tariffs could push inflation higher—a view echoed by many private-sector economists.

Bowman and Waller, both appointed by Trump, voted with Powell to keep rates steady last week but now argue that tariffs may have less impact on inflation and growth than initially feared, per CNBC. Bowman said recent measures of policy uncertainty have eased, but she remains concerned about softening in the labor market, suggesting the Fed "should put more weight on downside risks to our employment mandate going forward." (The debate comes as Trump continues to pressure Powell to lower rates more quickly.) (This content was created with the help of AI. Read our AI policy.)