Fed’s Bowman Signals Openness to July Rate Cut Amid Easing Inflation

Federal Reserve Vice Chair for Supervision Michelle Bowman said Monday that she is open to cutting interest rates as early as the July 29–30 policy meeting, marking a shift in tone as inflation trends closer to the Fed's 2% target.

“Should inflation pressures remain contained, I would support lowering the policy rate... to sustain a healthy labor market,” Bowman said at a policy event in Prague.

Her remarks represent a dovish turn for one of the Fed’s key voices, especially after months of resistance to rate cuts. Bowman also expressed rising concern over labor market fragility and noted that recent softness in consumer spending may warrant more caution.

Shift in Fed Sentiment

Markets reacted positively, with U.S. Treasury yields dropping and major indexes closing higher on renewed rate-cut hopes. Futures traders have mostly priced in the first rate cut for September, but Bowman's comments now raise the odds for action in July.

Adding to the dovish sentiment, Chicago Fed President Austan Goolsbee said that recent tariff hikes have not yet had the feared inflationary impact and supported rate cuts if price pressures remain mild.

“If the dirt [from tariff uncertainty] is out of the air, then I think we should proceed,” Goolsbee noted at a business event in Milwaukee.

Inflation and Tariffs in Focus

While the Federal Open Market Committee (FOMC) held rates steady last week at 4.25%–4.5%, most officials continue to forecast two rate cuts this year, contingent on inflation progress.

Fed Chair Jerome Powell and other officials have expressed concerns that President Trump’s evolving tariff policy could lift consumer prices and suppress growth, although Bowman played down the inflation risks, saying higher tariffs appear to be offset by other economic forces.

She also credited Trump’s broader policy mix — including regulatory rollbacks and tax reforms — for supporting business investment and limiting economic drag.