Stock market today: S&P 500 hits fresh record close on stronger economic growth
Investing.com -- Federal Reserve Vice Chair for Supervision Michelle Bowman revealed Wednesday she dissented from the Federal Open Market Committee’s decision to maintain interest rates, preferring instead a 25 basis point cut.
In her statement, Bowman explained that with inflation moving "considerably closer" to the Fed’s 2% target (after excluding temporary tariff effects) and signs of a slowing economy, she believed it was appropriate to begin gradually moving from a "moderately restrictive policy stance toward a neutral setting."
Bowman noted that while the U.S. economy remained resilient in the first half of 2025, underlying economic growth has "slowed markedly." She pointed to softening consumer spending and declining residential investment, which she attributed to elevated interest rates, slower personal income growth, and financial pressures on lower-income households.
The labor market, while still near full employment with historically low unemployment in June, shows "increasing signs of fragility," according to Bowman. She highlighted that the employment-to-population ratio has dropped significantly this year, businesses are reducing hiring while retaining existing workers, and job gains have been concentrated in a narrow set of industries less affected by business cycles.
On inflation, Bowman stated that without tariff effects, the 12-month change in core personal consumption expenditures prices would have been less than 2.5% in June, down from 2.9% in December and "considerably closer" to the Fed’s 2% target.
With inflation on a "sustained trajectory toward 2%," softness in demand, and labor market fragility, Bowman argued the Fed should "start putting more weight on risks to our employment mandate."
She warned that delaying action could result in deterioration of the labor market and further economic slowdown, suggesting a "proactive approach" would "avoid an unnecessary erosion in labor market conditions" and reduce the chance of needing a larger policy correction later.
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