Fed Vice Chair Bowman Voices Support for Three Rate Cuts This Year, Starting in September

Last week, the Federal Reserve kept the target range for the federal funds rate unchanged at 4.25% to 4.50% for the fifth consecutive meeting. In the decision, Bowman and another governor, Christopher Waller, cast dissenting votes, arguing for a 25-basis-point rate cut.

Both Bowman and Waller were appointed to the Fed Board during Trump's first term. Bowman has extensive expertise in handling inflation, regulation, and banking operations. In March of this year, she was nominated by Trump to serve as Vice Chair for Supervision.

She stated that such a move "would help avoid further unnecessary deterioration in labor market conditions and reduce the likelihood that the Committee would need to make more substantial policy adjustments if the labor market weakened further."

Bowman reiterated her previous view that tariff-driven price increases are unlikely to persistently push up inflation. "As my confidence that tariffs will not create a lasting inflationary shock has grown, I believe the upside risks to price stability have diminished," she said.

In the section of her remarks addressing community banks, Bowman noted that the October 9 meeting would explore potential reforms to the capital framework for these lenders. She had previously expressed concerns about community banks' ongoing loss of competitiveness and market share to larger banks.

"Community banks are the backbone of the banking and financial system, supporting local communities and their customers. These banks are often overlooked, with insufficient attention paid to long-standing and emerging issues, as well as industry and consumer concerns," she said.

She mentioned possible adjustments to the so-called "community bank leverage ratio" framework. She plans to reshape the Fed's regulatory system for community banks, striving to avoid imposing capital requirements designed for large banks on them.