Michelle Bowman, who is the Federal Reserve’s vice chair for supervision, was one of two members of the Federal Open Market Committee who dissented from the majority vote that kept interest rates unchanged when policymakers made their decision at the end of July.

Making a public appearance over the weekend in Colorado Springs, Colo., for the 2025 CEO & Senior Management Summit hosted by the Kansas Bankers Association, Bowman recapped why she pushed for a rate cut. She also reiterated she would continue to work with her colleagues to make one happen when the Fed has its next opportunity on Sept. 17.

“Earlier this year, I believed our policy stance was appropriate, giving time to allow the committee to monitor the progress of inflation toward our goal and to better understand the impacts of the administration’s policies on the economy,” Bowman said at the bankers event.

“At the June FOMC meeting and in a speech shortly following that meeting, I began to lay out my reasoning to support the process of beginning to gradually lower the federal funds rate in July based on my assessment of signs of fragility in labor market conditions,” she continued. “In my view, economic conditions appeared to be shifting, and as a result, we should reflect this shift in our policy decisions. Inflation has moved considerably closer to our target, after excluding temporary effects of tariffs, and the labor market has remained near full employment.

“As my dissent statement notes, with economic growth slowing this year and signs of a less dynamic labor market becoming clear, I see it as appropriate to begin gradually moving our moderately restrictive policy stance toward a neutral setting. Taking action at last week’s meeting would have proactively hedged against the risk of a further erosion in labor market conditions and a further weakening in economic activity,” Bowman added.

Bowman acknowledged fresh labor market data had not been finalized when policymakers had to make their rate decision. But the July readings arrived immediately afterward, and Bowman explained the information reinforced her argument for making a cut.

“Although the unemployment rate remained historically low at 4.2 percent in July, the latest employment report confirmed some of the signs of fragility and reduced dynamism in the labor market that I discussed at last week’s FOMC meeting without the benefit of having seen the July report,” Bowman said.

“The unemployment rate moved back up in July and was close to rounding up to 4.3 percent, largely reflecting reduced hiring as businesses continue to retain existing workers instead of increasing layoffs,” she continued. “The employment-to-population ratio has dropped significantly this year, suggesting more softening in labor market conditions than the unemployment rate implies.”

Bowman then elaborated about how that softening might intensify.

“With the memories of pandemic worker shortages still fresh, businesses have chosen to maintain, instead of reducing, their work forces in response to the slowing economic conditions,” she said. “And they seem to be more willing to reduce profit margins as they are less able to fully pass through higher costs and raise prices given the weakness in demand.

“If demand conditions continue to soften, businesses may need to begin to lay off workers, recognizing that it may not be as difficult to rehire given the shift in labor market conditions,” Bowman went on to say.

How might Bowman approach her next gathering with policymakers?

“In my view, it is also important that the committee’s approach to monetary policy decision making is consistent over time, especially when we face shifting economic conditions,” she said. “I recognize and appreciate that other FOMC members may see things differently and that they were more comfortable with leaving the target range for the policy rate unchanged.

“I am committed to working together with my colleagues to ensure that monetary policy is appropriately positioned to achieve our dual goals of maximum employment and price stability. In the meantime, I will continue to carefully monitor the incoming data and information as the administration’s policies, the economy, and financial markets continue to evolve,” Bowman went on to say.