"Bowman was previously highly focused on inflation concerns, and her latest statement marks a significant shift."

Written by: He Hao, Wall Street Journal

Following Waller, another Federal Reserve official has expressed support for a rate cut next month. Notably, both of these governors were appointed by Trump during his first term.

On Monday, Federal Reserve Governor Bowman stated that if inflation pressures remain controlled, she would support a rate cut as early as July, as risks in the labor market may be rising, and inflation seems to be stabilizing towards the Fed's 2% target:

"If inflation pressures remain controlled, I would support lowering the policy rate at the next meeting to bring it closer to neutral levels while maintaining a healthy labor market." As U.S. government policies, the economy, and financial markets continue to evolve, she will closely monitor economic conditions.

Last Friday, Federal Reserve Governor Christopher Waller stated in an interview with CNBC that he might support a rate cut next month due to concerns about a weak labor market.

Nick Timiraos, a reporter for the Wall Street Journal known as the "Fed Whisperer," noted in a recent article that this is the first substantive comment on the economic outlook from Bowman since she was appointed by President Trump and confirmed by the Senate as Vice Chair for Supervision this spring. Bowman was previously highly focused on inflation concerns, and her latest statement marks a significant shift.

The article states that among the Federal Reserve officials who have spoken since last week's meeting, the first to express intent to cut rates at the Fed's next meeting at the end of July were two officials appointed during Trump's first term.

Second Fed official paves the way for rate cuts

At last week's June meeting, the Federal Reserve maintained the benchmark interest rate in the range of 4.25% to 4.5%, a level generally considered above the neutral rate that neither stimulates nor suppresses economic activity. After the meeting, Fed Chair Powell reiterated that policymakers could take a patient approach to rate adjustments, waiting for more details on changes in President Trump's economic policies, especially trade policies.

Bowman expressed her support for the Fed's June decision. She mentioned that the post-meeting statement reflected a shift in policy stance, with current policy uncertainty having decreased and the focus shifting to potential weakness in the labor market.

Economists had originally worried that Trump's tariffs would drive up inflation, but currently, the impact of the Trump administration's expanded use of tariffs has not yet appeared in economic data, with labor market and inflation data remaining strong. Meanwhile, Trump has softened his rhetoric and opened the door to negotiations with major trading partners.

Bowman recently pointed out:

"The data shows that tariffs and other policies have not yet had a significant impact on the economy. I believe the impact of tariffs on inflation may be more delayed and less severe than initially expected, especially since many businesses have stockpiled inventory in advance. Ongoing progress in trade and tariff negotiations has significantly reduced the risks in the economic environment. Changes in trade policy may have only a minimal impact on the Fed's preferred inflation indicators."

The Fed's responsibility is to maintain price stability and achieve maximum employment goals. Bowman noted that due to recent weak consumer spending and signs of weakness in the labor market, the downside risks the Fed faces regarding its employment goals may soon become more pronounced. "In my view, it is appropriate to acknowledge that the risk balance has shifted. When considering future policy paths, it is time to think about adjusting the policy rate."

The next FOMC meeting of the Federal Reserve will be held from July 29 to 30. According to the CME Group's FedWatch tool, traders currently see only a 23% chance of action at this meeting, while the probability of a rate cut in September is about 78%.

After Federal Reserve Governor Bowman's comments on the prospects for rate cuts:

• The S&P 500 index rose 0.57%, hitting a new daily high, the Dow Jones increased by 0.42%, and the Nasdaq gained 0.55%.

• The yield on the U.S. 10-year Treasury bond fell by more than 5.5 basis points, hitting a new daily low below 4.32%. The two-year Treasury yield briefly dropped nearly 4 basis points, hitting a new daily low, approaching 3.85%, continuing to decline from around 3.92% since 19:35 Beijing time, with two significant drops observed.

Bowman mentioned that Trump's tariff policy may have a temporary and limited impact on prices, making her the second senior Fed official to express a similar view recently, paving the way for a potential rate cut as early as July.

Another Federal Reserve Governor, Waller, also stated in an interview with CNBC last Friday that he believes the Fed could consider a rate cut in July.

Trump has been pressuring the Federal Reserve to lower interest rates to reduce the financing costs of the ever-expanding U.S. national debt. Since the Fed decided to hold steady last week, Trump has ramped up his criticism of Powell and the Federal Reserve Board.

Trump has stated that he believes the Fed should cut rates by at least two percentage points. Bowman's remarks did not mention what she believes the extent of the rate cut should be, while Waller indicated that such aggressive cuts are unnecessary.

Bowman discusses regulation

Bowman is the Vice Chair for Supervision at the Federal Reserve. On the same day, she warned that the current leverage ratio regulation has brought unexpected consequences to the market. It is time to re-examine this critical capital buffer mechanism, as there are concerns that this rule limits banks' trading activities in the $29 trillion U.S. Treasury market. Bowman stated:

"The leverage ratio's impact on bank-affiliated broker-dealers may have broader market implications, including the market volatility observed in Treasury market intermediation. Once we identify those unexpected consequences that were not considered when formulating regulatory approaches, we must consider re-examining earlier regulatory and policy decisions."

Earlier this month, Bowman outlined an ambitious agenda—from reviewing the capital buffer mechanism known as the "supplementary leverage ratio" to exempting community banks from regulatory requirements aimed at large financial institutions.

According to previous media reports, the Federal Reserve and other regulatory agencies are expected to announce potential modifications to the leverage ratio rules this week, proposing adjustments to the overall ratio rather than excluding specific assets like U.S. Treasuries, as some observers had predicted.

She also stated that the Federal Reserve will hold a meeting on July 22 to discuss bank capital issues, noting that "simple reforms" could improve the operational resilience of the Treasury market during stress events. Bowman had previously criticized the regulators' plans to require the largest U.S. banks to significantly increase their capital to address potential crises.

It is widely expected that Bowman will support significant easing of the proposal known as the "Basel III Endgame." This plan, initially announced in 2023, aimed to raise capital requirements for large banks by 19%. The Federal Reserve subsequently rolled back some of its proposals in response to industry opposition.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。