Federal Reserve Vice Chair for Oversight Michelle Bowman joins “Mornings with Maria” to discuss the relaxation of capital rules for banks, the Fed’s outlook for economic growth and the rising risks of private credit, AI investments and global tensions.
Michelle Bowman, the Federal Reserve’s vice chair for supervision, said Friday that she has planned multiple rate cuts before the end of the year.
Bowman also said she expects strong economic growth this year.
Federal Reserve Vice Chair for Oversight Michelle Bowman said it has made three interest rate cuts before the end of the year. (Al Drago/Bloomberg/Getty Images)
FEDERAL RESERVE KEEPS INTEREST RATES STABLE
Her comments come after the FOMC voted 11-1 on Wednesday to leave the fed funds rate unchanged at a range of 3.5% to 3.75%. It was the second straight meeting where rates were held steady after three consecutive 25 basis point cuts in September, October and December ending last year.
Policymakers also published a summary of economic projections (SEP), which showed that the median projection for rates sees just one cut of 25 basis points for the rest of this year, followed by a single cut of that magnitude in 2027.
WILL THE FEDERAL RESERVE LOWER INTEREST RATES IN 2026?
“In our SEP, FOMC participants wrote down their individual estimates of an appropriate trajectory for the Federal Funds Rate under what each participant considers the most likely scenario for the economy,” said Federal Reserve Chairman Jerome Powell. “The average participant predicts that the appropriate level of the Federal Funds Rate will be 3.4% at the end of this year and 3.1% at the end of next year, unchanged from December.”
During the press conference after the Fed’s rate decision, Powell was asked what officials saw that led them to predict a cut, despite higher forecasts for both inflation and unchanged projections for the unemployment rate and economic growth.
FED’S POWELL SAYS IT’S ‘TOO SOON TO KNOW’ IRAN WAR’S IMPACT ON THE ECONOMY
“Essentially, the forecast is that we will make some progress on inflation, not as much as we had hoped, but some progress on inflation,” Powell said. “It should come when we start to see progress on rates in the middle of the year and then rate inflation comes down. We should see that.”
Federal Reserve Vice Chair for Supervision Michelle Bowman, like Fed Chair Jerome Powell, said it is too early to say what impact the war against Iran will have on the US economy. (Al Drago/Bloomberg via Getty Images)
The latest tariff decision comes amid a weakening labor market and growing uncertainty over the war in Iran. Like Powell, Bowman said it is too early to know what impact the conflict in the Middle East will have on the U.S. economy.
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“I think it’s too early to say what the longer-term impact will be on U.S. economic activity and how we should think about that in terms of our longer-term economic forecasts and how we should think about that in terms of our FOMC meetings and any interest rate changes that we might make as a result of the future economic evolution.”
