In a rare move, two Federal Reserve governors, Michelle Bowman and Christopher Waller, dissented from the Federal Open Market Committee’s decision to hold interest rates steady for the fifth consecutive meeting. The dissent marked the first time in over 30 years that multiple Fed governors opposed a rate-cutting decision.
Bowman and Waller argued that the economy was showing signs of slowing growth, with real gross domestic product (GDP) at 1.2% in the first half of 2025, and that the labor market was nearing full employment. They proposed cutting interest rates by 25 basis points to address these concerns.
Bowman stated that inflation had moved closer to the Fed’s 2% goal, after excluding temporary effects from tariffs, and that a rate cut would help mitigate further weakening in the economy and protect the labor market. She also expressed confidence that tariffs would not have a persistent impact on inflation.
Waller added that central banks should “look through” tariffs as temporary price increases, which do not cause long-term inflationary pressures. He suggested that the median FOMC participant estimates the neutral rate to be around 3%, implying cuts of 125-150 basis points from the current range.
While the majority of FOMC members agreed with a wait-and-see approach on the impact of tariffs on inflation, Waller believed this stance was overly cautious and may have led to policy falling behind the curve. The disagreement highlights rising tensions among policymakers over how to address inflation and labor market concerns in the face of ongoing trade uncertainty.
Source: https://www.foxbusiness.com/economy/dissent-not-seen-three-decades-two-fed-governors-wanted-cut-interest-rates-here-why