Fed's Bowman: Upside risks to price stability have diminished

In a statement published on Friday, Federal Reserve (Fed) Governor Michelle Bowman explained why she voted in favor of a 25 basis points (bps) rate cut at the July policy meeting.

Key takeaways

"With growth slowing and less dynamic labor market, I saw it as appropriate to begin gradually moving our moderately restrictive policy stance toward a neutral setting."

"This action would have proactively hedged against a further weakening in the economy and the risk of damage to the labor market."

"I see that upside risks to price stability have diminished as I gain even greater confidence that tariffs will not present a persistent shock to inflation."

"Think that we should start putting more weight on risks to our employment mandate."

"If demand conditions do not improve, firms may have little option other than to begin to lay off workers."

"Believe beginning to move policy rate at gradual pace toward neutral will help maintain labor market near full employment, ensure smooth progress toward dual-mandate goals."

"Risk that a delay in taking action could result in a deterioration in the labor market and a further slowing in economic growth."

"Recognize and appreciate that other FOMC members may see things differently."

"Remain committed to working together with my colleagues to ensure that monetary policy is appropriately positioned."

Market reaction

The US Dollar Index holds its ground and stays in positive territory above 100.00.

These comments by Bowman received a dovish/neutral score of 4.4% from FXStreet Fed Speech Tracker. Nevertheless, FXStreet Fed Sentiment Index holds in hawkish territory, slightly above 120.