Michelle Bowman supports a rate cut if inflation remains low
Michelle Bowman, a member of the Board of Governors of the Federal Reserve, stated that she is ready to vote in favor of a rate cut at the policy meeting in July if inflationary pressures continue to be controlled.
Speaking at a conference in Prague, she emphasized that current data qualifies the Fed to lower the benchmark interest rate. This means she agrees with the views of Christopher Waller, also a Fed member, who publicly supported the possibility of a rate cut last week.
According to CNBC, Bowman shared with delegates: 'If inflationary pressures remain stable, I will support a rate cut at the next meeting to bring this rate closer to neutral, thereby maintaining a healthy labor market.'
She also stated that she will continue to closely monitor the White House's policies, the overall economic developments, and the financial system in the coming weeks.
Fed Chair Divided on Timing of Rate Cuts
The Fed meeting is scheduled for July 29-30, but futures investors are still not fully convinced of the likelihood of an early change. The CME FedWatch tool currently estimates the probability of a rate cut in July at 23%, while 77% lean towards the possibility occurring in September.
Currently, the Fed's main interest rate is held in the range of 4.25% to 4.5%, unchanged since the last FOMC meeting. This meeting signaled a shift in tone. Chair Jerome Powell emphasized that the Fed can still be patient, especially as the labor market remains strong and the most recent inflation data is relatively stable.
Impact of trade policy and views on rate cuts
Donald Trump, back in the White House, has publicly urged the Fed to aggressively cut interest rates, suggesting a reduction of at least 2 percentage points to lower borrowing costs amid rising public debt. However, both Bowman and Waller do not support such a drastic cut. In fact, Waller asserted that 'there is no need to cut that aggressively.'
Bowman also noted that Trump's tariff policy will affect inflation but may be delayed and have less impact than expected, as many businesses have stockpiled inventory ahead of the new tax application.
Divergent consensus: Mary Daly wants to wait for more data
Not all Fed members agree with Bowman and Waller. Mary Daly, President of the San Francisco Fed, stated that she wants to wait for more data to make a more cautious decision. She told CNBC: 'We need enough information before acting.'
Daly emphasized that unless the labor market shows clear and prolonged negative signs, she believes that a rate cut in the fall would be more reasonable. Although she does not have voting rights this year, she reflects a deep division within the Fed.
Policy volatility and divergence in interest rate predictions
As Trump tones down the trade war rhetoric, there is a trend towards renegotiating with partners, and inflationary pressures are also easing. This creates greater space for the Fed to consider the timing and form of intervention.
The Fed's interest rate forecast (dot plot) shows a clear contradiction. Of the 19 members, 7 predict keeping the rates unchanged until the end of 2025, 2 expect one rate cut, while 10 believe there could be 2-3 rate cuts this year.
The Fed Chair continues to support a focus on controlling the labor market rather than external factors, as stated after the recent meeting. This signals that the Fed is attentive to the risk of weakening employment if interest rates remain high for too long.
Source: https://tintucbitcoin.com/fed-bowman-ung-ho-ha-lai-suat-thang-7/
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