While the Fed’s majority has taken a more cautious line, wary that President Donald Trump’s tariffs might slow progress on bringing inflation down to its 2% target, Bowman said she now has greater confidence those trade measures will not create lasting inflationary pressure. Excluding tariff-related increases in goods prices, she said, inflation is “much closer” to the Fed’s goal than the official 2.8% reading for June suggests.
Bowman has argued that waiting too long to adjust could require more abrupt and potentially damaging moves later. “Taking action at last week’s meeting would have proactively hedged against the risk of a further erosion in labor market conditions and a further weakening in economic activity,” she told the bankers.
Her August 1 statement on the July policy decision offered similar reasoning: “With tariff-related price increases likely representing a one-time effect, it is appropriate to look through temporarily elevated inflation readings. As I recognize that economic conditions are shifting, I believe that beginning to move our policy rate at a gradual pace toward its neutral level will help maintain the labor market near full employment and ensure smooth progress toward achieving both of our dual-mandate goals.”
The Fed has three policy meetings left this year—September, October and December—giving limited runway to deliver the cuts Bowman envisions. Economists often estimate that monthly job gains of about 100,000 are needed to keep employment steady, though Bowman noted that lower immigration since January could mean the threshold is smaller.
Mortgage market professionals will be closely watching the September meeting, as any shift toward easing could lower funding costs for lenders and potentially unlock rate-sensitive demand in housing. Bowman underscored that “upside risks to price stability have diminished,” with housing demand already “at its weakest since the financial crisis.” She added that easing policy gradually from its current restrictive stance would “reduce the chance that the Committee will need to implement a larger policy correction should the labor market deteriorate further.”