11-Aug-2025 11:27

The US Fed Vice Chair for Supervision Michelle W. Bowman has offered her outlook on the economy and an update on the recent meeting of the Federal Open Market Committee (FOMC). She noted that at last week's FOMC meeting, she dissented from the Committee's decision to hold the policy rate at its current level. Economic conditions appeared to be shifting, and as a result, we should reflect this shift in our policy decisions. Inflation has moved considerably closer to our target, after excluding temporary effects of tariffs, and the labor market has remained near full employment. She noted that the US economy has been resilient so far this year. Underlying economic growth has slowed markedly, but despite increasing signs of fragility as the latest employment report more clearly shows, the labor market appears to remain near estimates of full employment. Bowman opined that with tariff-related price increases likely representing a one-time effect, my view is that inflation will return to 2 percent after these effects dissipate. Because changes in monetary policy take time to work their way through the economy, it is appropriate to look through temporarily elevated inflation readings and therefore remove some policy restraint to avoid weakening in the labor market.

Powered by Commodity Insights