Michelle Bowman, Vice Chair of the Federal Reserve. Yonhap News. 

Michelle Bowman, the US central bank's Vice Chair for Financial Regulation at the Federal Reserve (Fed), stated on the 9th (local time) that there is a need to lower the benchmark interest rate at each of the remaining three monetary policy meetings this year.

Speaking at an event hosted by the Kansas Bankers Association in Colorado, Vice Chair Bowman said, "In my previous economic outlook, I projected three rate cuts this year, and recent labor market indicators reinforce this view."

Governor Bowman emphasized the need for preemptive monetary policy action to prepare for a weakening labor market, given that concerns about rising inflation are limited.

He judged that "price increases due to tariffs are likely to be a one-off event," adding, "Once these effects dissipate, I expect inflation to return to 2%."

He further stressed that "there is a lag in the impact of monetary policy changes on the economy" and that "delayed action carries the risk of worsening labor market conditions and further slowing growth."

Previously, Vice Chair Bowman and Fed Governor Christopher Waller dissented from the majority opinion when the Federal Open Market Committee (FOMC) kept the benchmark interest rate unchanged for the fifth consecutive time at 4.25-4.50% on the 30th of last month, expressing a preference for a rate cut.

This marked the first time in 32 years, since 1993, that two Fed governors simultaneously expressed dissenting opinions.

Some in Wall Street speculated that Vice Chair Bowman and Governor Waller may have voiced these dissenting opinions due to political considerations amid continued pressure from US President Donald Trump for the Fed to lower interest rates.

However, with the July employment report released on the 1st revealing a noticeable weakening in US employment growth in recent months, Wall Street is now operating under the assumption that the Fed will cut rates in September.

In July, US nonfarm payrolls increased by 73,000 compared to the previous month, falling short of economists' expectations of 100,000 as compiled by Dow Jones. Furthermore, job gains for May-June were revised down by a total of 258,000 from previously reported figures.

Yonhap News