Bowman & Waller Signal July Rate Cut on the Table — Evening Brief – 06.23.25 

Fed Vice Chair for Supervision Michelle Bowman joined Governor Christopher Waller in signaling that a rate cut as early as July is now under serious consideration, marking a notable dovish shift from both policymakers ahead of the July 29–30 FOMC meeting. Speaking in Prague, Bowman broke from her previously cautious stance, stating that “if inflation pressures remain contained,” she would support lowering rates next month to move policy closer to neutral while sustaining labor market strength. 

Bowman became the second Fed official in recent days to suggest that President Trump’s new tariffs are unlikely to deliver the near-term inflation spike some feared. “I think it is likely that the impact of tariffs on inflation may take longer, be more delayed, and have a smaller effect than initially expected, especially because many firms frontloaded their stocks of inventories,” Bowman noted. “As we think about the path forward, it is time to consider adjusting the policy rate.” 

Her comments closely tracked those made by Waller in a CNBC interview on Friday, where he stated, “We could do this as early as July,” contingent on incoming inflation data continuing to moderate. The combined remarks add growing momentum to the dovish bloc within the FOMC, injecting renewed urgency into market expectations that had previously centered on rate cuts beginning in September or later. Despite the shift in tone, futures markets continue to reflect some caution, assigning roughly a 20%–23% probability of a July cut. 

Both Bowman and Waller emphasized flexibility, pointing to a data-dependent approach: if inflation moderates further and labor market data soften, a July cut could be justified. The Fed held rates steady at 4.25%–4.5% for a fourth consecutive meeting last week, but these latest remarks make clear that easing discussions are now active, even as Chair Powell and others continue to urge patience for more data confirmation. 

Markets responded quickly to Bowman’s shift, with bond yields easing, the dollar retreating, and two-year Treasuries rallying as traders pulled forward expectations for policy easing. With deep divisions emerging inside the Fed, the July FOMC meeting is shaping up as a critical inflection point that may hinge directly on upcoming inflation and employment reports.