“Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward.”
The Fed cut rates for the first time in 2025 last week, reducing its funds rate by 25 basis points to a target range between 4% and 4.25%. Bowman supported that move, but had also called for a cut in July when a majority of her colleagues backed a rate hold.
Fed chair Jerome Powell has continually cited tariffs and the trade war as prominent reasons for a cautious approach to monetary policy, drawing Trump’s ire for not bringing rates lower earlier.
But Bowman said Friday that when tariffs are removed from inflation calculations, the consumer price index (CPI) has “continued to hover not far above our target,” and suggested addressing labor market fears was more important than meeting the Fed’s 2% goal.
The Federal Reserve’s main inflation measure showed core prices rising largely in line with expectations in August, keeping the Federal Reserve on course for two more interest rate cuts this year.https://t.co/alduI0f8eF
— Mortgage Professional America Magazine (@MPAMagazineUS) September 26, 2025
Bowman also said she wanted the Fed to run “the smallest balance sheet possible” and flagged the risk of relying purely on the sale of mortgage-backed securities to simplify the Fed’s portfolio.
