Overview

• In a New York speech, Vice-chair Michelle Bowman warned the Fed risks being behind the curve on deteriorating labor conditions and said policy may need to adjust faster and by more if weakness deepens.
• She argued tariff-driven price increases are largely one-time effects and said inflation excluding tariffs remains close to the Fed’s goal.
• Bowman backed last week’s 25-basis-point cut to a 4.00%–4.25% range after urging a cut in July, while indicating a preference to move in quarter-point steps for now.
• She called for the smallest feasible balance sheet with reserves nearer to scarce than ample, a Treasury-only portfolio tilted to shorter maturities, and consideration of active sales of mortgage-backed securities.
• She urged changes to the Standing Repo Facility, proposing a minimum bid rate set above the top of the federal funds target range to keep it a true backstop rather than a routine funding source.