The Federal Reserve’s decision to keep interest rates unchanged has been turned on its head after two Board of Governors members, Christopher Waller and Michelle Bowman, expressed concerns over the labor market. Their dissenting statements have bolstered their views, making a rate cut at the next meeting more likely.
Waller stated that despite the labor market appearing healthy on the surface, private-sector payroll growth is slowing down, and data suggest an increase in downside risks. He argued that the Fed should not wait for the labor market to deteriorate before cutting interest rates, given underlying inflation is near target and upside risks are limited.
Bowman echoed similar concerns, stating that the labor market has become less dynamic and shows increasing signs of fragility. The odds of a rate cut at the next meeting have skyrocketed, with bond yields falling in response to the weak jobs report.
Source: https://www.axios.com/2025/08/01/jobs-report-july-fed-rate-cuts