Two Federal Reserve officials who voted this week against holding a key interest rate in place explained their decisions Friday, both indicating that the central bank is making a mistake by waiting to ease policy amid rising threats to the labor market.
Governors Christopher Waller and Michelle Bowman both said they wanted a quarter percentage point reduction, as they see tariffs having only a temporary impact on inflation. They said staying on hold, as the rate-setting Federal Open Market Committee has done since December, poses risks to the economy.
In separate statements, Waller and Bowman laid out their reasons for dissenting, the first time two governors have done since 1993. The committee voted 9-2 to hold, and the differences of opinion reflect “a healthy and robust discussion,” Waller said.
“There is nothing wrong about having different views about how to interpret incoming data and using different economic arguments to predict how tariffs will impact the economy,” he wrote. “But, I believe that the wait and see approach is overly cautious, and, in my opinion, does not properly balance the risks to the outlook and could lead to policy falling behind the curve.”
Further, Waller insisted that inflation impacts from President Donald Trump’s tariffs have been “small so far” and could continue in that vein.
