Dissenting Fed Vice Chair Urges Rate Cuts As Jobs Data Weakens, Inflation Nears Target ? Still Sees 'Three Cuts' In 2025

Federal Reserve Vice Chair for Supervision Michelle Bowman, who dissented at last month’s Federal Open Market Committee (FOMC) meeting, reiterated her call for interest rate cuts, citing the weak jobs report early this month, and inflation nearing the Fed’s 2% target.

Risks To Jobs Outweigh Inflation Concerns

Speaking at the Kansas Bankers Association 2025 on Saturday, Bowman pointed to payroll employment growth slowing sharply to “only 35,000 jobs per month over the three months ending in July,” with downward revisions to May and June figures, to once again make her case for a cut in interest rates.

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On inflation, Bowman notes that the core personal consumption expenditures stood at 2.8% in June, which, after excluding effects of the tariffs, “would have been lower than 2.5 percent,” which she says is “significant progress and much closer to our 2 percent target.”

“My Summary of Economic Projections includes three cuts for this year, which has been consistent with my forecast since last December, and the latest labor market data reinforce my view,” she says, while stressing that “monetary policy is not on a preset course,” hinting that her opinions might change based on the incoming data.

Bowman emphasizes that the Fed’s mandate on employment now takes precedence over its focus on price stability. “With underlying inflation on a sustained trajectory toward 2 percent, softness in aggregate demand, and signs of fragility in the labor market, I think that we should focus on risks to our employment mandate,” she says.

Markets Are Pricing A Rate Cut

According to the CME Group’s FedWatch tool, markets are now pricing an 88.4% probability of the Fed lowering rates by 0.25% in September.

Similarly, the odds of another rate cut in October are at 56.7%, and in December at 46.4%, hinting at a major dovish pivot in the markets.

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