Christopher Rugaber, Associated Press
WASHINGTON (AP) — Federal Reserve Gov. Michelle Bowman said Monday that central banks should consider cutting key interest rates soon at their next meeting in July, and should highlight a deep division among Fed officials as they withstand sharp criticism from the White House.
Bowman said President Donald Trump’s tariffs have not caused an inflationary jump so far that many economists fear, and future prices will likely be a one-off rise.
“The impact of tariffs on inflation could be longer, delayed and less effective than initially expected,” Bowman said in a speech on Monday in Prague. “If inflationary pressure is reduced, we will support lowering the policy rate as soon as the next meeting,” the plan is scheduled for July 29th to 30th.
Bowman, appointed to the Federal Reserve Governor’s Committee by Donald Trump in 2018, is the second well-known official to express his support for the potential cuts in July in just a few days. Christopher Waller on Friday was Trump’s appointee on the federal board, and in a television interview, the Fed should consider cutting borrowing costs next month.
Their comments came after Fed Chair Jerome Powell proposed at a press conference last week that the central bank monitors the economy over the summer and see how inflation responded to tariffs before deciding whether to cut borrowing costs.
Meanwhile, Trump has repeatedly criticised Powell for not cutting interest rates, calling the Fed’s chair “Numbskull” and “fools.” The president argues that the Fed cuts reduce government borrowing costs, but the fees paid by the government are mostly set by the power of the market, not the Fed.
Lowering Fed-controlled short-term interest rates often reduces borrowing costs for mortgages, car loans, and business loans. However, sometimes financial markets can maintain high long-term rates. The Fed cut that rate to around 4.3% last year, but the mortgage rate fell slightly.
On Friday, Waller told CNBC that the Fed should consider cutting fees next month as inflation is tamed and the economy could potentially slow down. He pointed to the recent rise in unemployment among university graduates as a sign of a possible economic weakness, saying it would be better to cut it before the labor market deteriorates significantly.
“We say we should start thinking about reducing policy rates at our next meeting, because we don’t wait until the job market tanks before we start cutting,” Waller said.
Still, at last week’s Fed meeting, seven of the 19 officials who participated in the central bank’s interest rate decisions supported a sustained money that remains unchanged for the remainder of the year, with the two being penciled in just one cut.
Despite widespread concern among economists that Trump’s tariffs will raise prices, inflation has been steadily cooling this year. The consumer price index reached just 0.1% between April and May, the government said last week that price pressure would be curtailed. Prices for some products rose last month, but the costs of many services, such as airfares and hotels, offsetting the impact of tariffs.
Compared to a year ago, prices rose 2.4% in May, up from 2.3% in April.
Trump fulfilled his 10% obligation on all imports, imposing an additional 30% on goods from China, 50% on steel and aluminum, and 25% on automobiles.
Still, many economists say tariffs are likely to increase inflation in the coming months. Fed Chair Jerome Powell proposed at a press conference last week that the central bank would closely monitor how inflation will evolve over the coming months before deciding whether to cut fees.
Also on Friday, Fed San Francisco chapter president Mary Daly told CNBC she saw her as the right time to cut fees “more autumn.”
Original issue: June 23, 2025, 3:22pm EDT
