Fed’s Bowman Comments on Dissent Regarding Large Rate Cut Amid Above-Target Inflation Data

Federal Reserve Governor Michelle Bowman expressed her dissent regarding the central bank’s recent decision to cut interest rates by half a percentage point. She advocated for a more cautious reduction of a quarter-point instead, citing concerns over inflation remaining above the 2% target and the potential for the public to misinterpret the larger cut as an early declaration of victory over inflation.

In a statement issued on Friday afternoon, Bowman highlighted the resilience of the job market and the overall economy, noting that “core personal consumption expenditures prices are still rising faster than 2.5% from 12 months earlier.”

Core inflation measures, which exclude volatile food and energy prices, are believed to provide a clearer picture of underlying price trends. Bowman emphasized the importance of moving steadily toward a more neutral policy stance in order to make further progress in reducing inflation to the 2% target. She argued that this approach would help avoid unnecessarily stimulating demand.