Conservatives at the Federal Reserve explains Bowman Waller opponents in favor of interest rates

Federal Reserve Conservatives Michelle Bowman, Christopher Waller on Friday issued statements that determine the reason for their support to reduce the interest rate at this week’s meeting. This was the first time in more than 30 years, two governors of the Federal Reserve, unlike a price decision. The last time was in 1993.

On Wednesday, Bowman Waller opposed the FOOC 9-2 vote on Wednesday to keep the federal federal funds rate for the Federal Reserve Cognition in the range of 4.25 % to 4.5 %, as both said they were supporting a 25-Basis interest point.

Members of FOMC spoke periodically, and the last opposition came from Bowman in September 2024, when it said that the Federal Reserve should have reduced interest rates by only 25 points instead of 50 Pasis discounts that voted policymakers to move forward.

Bowman said in her latter opposition that the Federal Reserve should have had reduced prices and wrote, “The inflation has approached our goal, after excluding the temporary effects of the customs tariff, laboratory It is still near the full employment. “

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“With the slowdown in economic growth this year and the signs of a less dynamic labor market, I saw it that it is appropriate to start gradually in conveying our moderate political position to a neutral environment. In my opinion, this measure was proactive against weakening more economics in the economy and the risk of damage to the labor market,” Bowman explained.

She added that she gained “greater confidence that the customs tariff will not provide continuous Shock“Which calls for more focus on the risks on the employment side of the double mandate for the federal reserve administrators.

Waller explained in his habit that the central banks should “consider” definitions “as” one time increase in the price level “, which” does not cause inflation beyond a temporary increase. “

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quote Economic data Including soft growth in the first half of 2025, with real GDP (GDP) by 1.2 %, and indicates that the rate of monetary policy must be closer to neutrality in view of the “temporary” effects of definitions of inflation and the labor market near full employment. Waller said that the participating average of FOMC is estimated to be about 3 %, which means discounts from 125 to 150 points from the current range.

He wrote: “The last reason for the reduction now is that although the labor market looks good on the roof, as soon as we calculate the expected data reviews, the growth of salaries in the private sector is approaching the speed of procrastination, and other data indicates that the negative risks of the labor market have increased.”

Waller said that he respects the view of the majority of FOMC with the approach to “waiting and see” on The effect of definitions on inflation He was more convenient, saying that different views are healthy for strong policy discussions. But he added that “I think the approach to waiting and seeing is very cautious, and in my opinion, it does not properly balance the risks to expectations and can lead to the policy behind the curve.”

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Waller added that he does not believe that FOMC should reduce the rates on a pre -determined path and that if the definitions do not cause an inflationary shock, the cuts can continue, and if they cause surprises of inflation and employment, the Federal Reserve can depend on these cuts.

During his press conference after FOMC, Federal Reserve Chairman Jerome Powell The opponents admitted and said that they were able to provide clear explanations for their thinking and that various opinions are healthy in committees like FOMC. He also said that although the high prices caused by customs tariffs can be short, and one stage, there is still a possibility that more inflationary pressures will pay.

Job growth in the United States was cooled in July, amid the increasing economic uncertainty

After the FOMC announced on Wednesday, the Ministry of Commerce issued on Thursday the Personal Consumption Expenditure Index (PCE). The Federal Reserve’s favorite inflation scale showed that inflation accelerated in June, increasing from 2.3 % to 2.6 % on an annual basis – away from the goal of the Federal Reserve by 2 %.

This was followed by the weakest job report on Friday, which was expected, which showed that the economy added only 74,000 jobs in July-less than 110,000 LSEG-Economists, while job gains were revised in May and June to 258,000.

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High inflation characters, and the dispute between policy makers on how to deal with them given the impact of definitions, besides what appears to be a weakening labor market, can hold the federal reserve path forward.