Would have liked a smaller first cut

Federal Reserve (Fed) Board of Governors member Michelle Bowman clarified on Friday why the policymaker voted against the Fed’s 50 bps jumbo rate cut this week. Fed Governor Waller goes down in the books as the first Fed Governor to vote against both the consensus and the Fed Chair since 2005.

Key highlights

I agreed it was appropriate at this meeting to recalibrate the Fed funds rate level, but I preferred a smaller first move.

We have not yet achieved the inflation goal.

I see risk that the FOMC’s larger policy action could be interpreted as a premature declaration of victory on inflation.

Such an approach would avoid unnecessarily stoking demand.

The economy remains strong and labor market remains near full employment.

I believe moving at a measured pace toward a more neutral policy stance will ensure further progress is made in returning inflation to 2% goal.

My reading of labor market data has become more uncertain because of measurement challenges, difficulty assessing immigration impact.

I respect and appreciate that colleagues preferred to go with a larger reduction, and remain committed to working with them to ensure policy is appropriately positioned to achieve dual mandate goals.