Fed's Bowman to Support Rate Cut at July Meeting if Inflation Remains in Check

03:31 PM EDT, 06/23/2025 (MT Newswires) -- Federal Reserve Vice Chair for Supervision Michelle Bowman said Monday she would support lowering interest rates as soon as next month provided that inflationary pressures remain "contained."

Last week, the central bank's Federal Open Market Committee kept its benchmark lending rate unchanged at 4.25% to 4.50% for a fourth straight meeting. US President Donald Trump has been repeatedly urging the Fed to cut 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," Bowman said Monday in remarks prepared for a speech in Prague. "Downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market."

Bowman said that she's seeking further confirmation that inflation is close to the FOMC's 2% target on a sustained basis and warned that the current military conflict in the Middle East or other geopolitical headwinds could result in higher commodity prices. The Trump administration's negotiations with the US' trading partners are likely to result in lower tariff rates than are currently in place, according to her.

"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 front-loaded their stocks of inventories," Bowman said. "All considered, ongoing progress on trade and tariff negotiations has led to an economic environment that is now demonstrably less risky."

The US and China recently agreed on a framework for implementing a trade deal that suspended most tariffs on each other's imports for 90 days. In April, Trump declared a 90-day pause on certain tariffs for countries that didn't retaliate to his reciprocal duties.

Last week, Fed Governor Christopher Waller reportedly said the FOMC may be in a position to ease monetary policy "as early as July," as tariffs are unlikely to increase inflation significantly.

Markets are currently pricing in a roughly 23% probability that policymakers will reduce interest rates by 25 basis points at their July meeting, according to the CME FedWatch tool. The remaining odds are in favor of another pause.

Bowman said that monetary policy was not on a preset course and that the FOMC's decisions will continue to be driven by incoming data. The committee's updated Summary of Economic Projections showed last week that policymakers continue to see potential rate easing in 2025. They lowered their economic growth expectations and raised inflation forecasts.

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