Federal Reserve Board Governors Christopher Waller and Michelle Bowman have publicly disagreed with the Fed’s recent decision to keep interest rates steady. Both governors, appointed by former President Donald Trump, expressed their concerns that delaying rate cuts could negatively affect the U.S. economy.
In statements released on Friday, Waller and Bowman advocated for gradual interest rate cuts. They believe that the impact of Trump’s tariffs on inflation has been minimal so far. Their dissent comes after the Federal Reserve voted 9-2 to maintain interest rates in the range of 4.25% to 4.50%. This marked a significant moment, as it was the first time since 1993 that multiple governors disagreed with the board’s decision.
Waller emphasized that differing opinions on economic data are normal and healthy. He argued that the Fed’s cautious approach could lead to policy falling behind, potentially harming the economy. He suggested cutting rates by as much as 1.5 percentage points, which is less than Trump’s call for a three-point cut.
Bowman, who oversees bank supervision at the Fed, echoed similar sentiments. She pointed out that the price increases from tariffs are likely temporary and urged the Fed to look past these short-term inflation spikes. She warned that waiting too long to take action could worsen the labor market and slow economic growth further.
In a press conference, Fed Chair Jerome Powell acknowledged that while inflation has decreased since its peak in mid-2022, it still remains above the Fed’s long-term target of 2%. He also noted ongoing concerns about the inflationary effects of Trump’s tariffs.
Following the Fed’s decision, Trump took to social media to criticize Powell. He called the Fed Chair "Jerome ‘Too Late’ Powell," demanding immediate rate cuts and suggesting that the board should take control if Powell does not comply. Trump also commented on Waller’s and Bowman’s dissent, indicating that their push for rate cuts would grow stronger.
As the Fed navigates these challenges, the differing views among its governors highlight the tension between economic policy and political pressures. With Powell’s term ending in May, the dynamics within the Fed could shift, especially if Waller and Bowman continue to align with Trump’s views.
