Federal Reserve Governor Michelle Bowman has warned that the central bank should not signal a halt to its rate-cutting cycle amid ongoing economic uncertainties. In a recent policy commentary, she highlighted persistent inflation pressures and global risks that could impact the U.S. outlook.
Why Pausing Now Could Be Premature
Bowman emphasized that while growth has shown signs of moderation, core inflation remains above the Fed's 2% target, and the labor market continues to show resilience. Premature tightening could jeopardize the balance between cooling inflation and sustaining growth.
- Inflation has not yet settled sustainably at target
- Global financial volatility may spill over into U.S. markets
- Rising borrowing costs could hamper consumer and business spending
She cautioned against overreacting to transient data, urging policymakers to focus on anchoring medium-term inflation expectations. Signaling a pause too soon might tighten financial conditions unnecessarily.
A Data-Driven Path Forward
Bowman refrained from endorsing a specific rate move at the next meeting, instead advocating for a data-dependent approach. She stressed the importance of maintaining optionality in policy and avoiding forward guidance that could limit the Fed’s responsiveness.