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Fed Governors Christopher Waller and Michelle Bowman issued rare public statements today defending their dissenting votes in favor of a rate cut at this week’s FOMC meeting. Both argued that a more proactive approach was needed to support the economy amid slowing growth and labor market softening.
Waller reiterated points he made in a July 17 speech, emphasizing that maintaining the current policy rate risks falling behind the curve. He argued that if tariffs don’t materially worsen inflation, rate reductions should continue at a moderate pace. In contrast, if inflation or employment picks up sharply, the Fed can always pause. “I see no reason we should hold and risk a sudden decline in the labor market,” he stated.
Bowman echoed similar concerns, saying the decision to begin gradually reducing rates was a hedge against further labor market weakness. She stressed that recent inflation increases tied to tariffs are likely transitory, and holding policy too tight could harm the Fed’s employment mandate. “A proactive approach… would avoid an unnecessary erosion in labor market conditions,” she said.
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