Overview

• The Fed left its overnight target rate at 4.25% to 4.50% in its most recent meeting due to economic uncertainty caused by unpredictable trade tariffs
• Vice Chair Michelle Bowman said she would support a rate cut at the July 29-30 meeting if inflation pressures remain contained to bring borrowing costs closer to neutral and sustain the labor market
• Bowman stated that underlying core inflation is moving closer to the Fed’s 2% target and that higher tariffs have had minimal net impact on price trends
• She warned that recent softness in spending and signs of labor market fragility pose downside risks to employment
• Governor Christopher Waller echoed Bowman’s view in a television interview and said he would consider cutting rates next month while being mentioned as a potential successor to Chair Jerome Powell