The decision of the United States (U.S.) central bank to confirm the current interest rates received the most negative votes from governors in more than three decades, official data showed.
Governor Christopher Waller and the central bank’s Vice Chair for Supervision, Michelle Bowman, voted against the decision confirming the current U.S. interest rate range of 4.25 to 4.5 percent.
Both Waller and Bowman believed they should be lowered by a quarter percentage point.
This means that for the first time since December 1993, two governors voted against the consensus, according to data from the Fed’s St. Louis branch.
Governors rarely officially express disagreement with the consensus, which is more common among leaders of the Fed’s regional branches. Thus, in September last year, Bowman advocated for a more moderate cut than her colleagues.
A vote ‘against’ is generally a normal occurrence in the monetary policy committee, but this year no governor had opposed the consensus – until Wednesday. In the whole of 2024, there have been only two votes against, and in 2023, none.
Both Bowman and Waller had signaled before the two-day session that they leaned toward lowering borrowing costs. In a speech on July 17th, Waller warned that “the economy is still growing, but at a significantly slower pace, and the committee is exposing itself to an increased risk of failing to meet the mandate that requires full employment.”
Any potential inflation increase due to tariffs will, in his estimate, be short-lived, and the central bank can ignore it. Demand for labor could, however, weaken, and the Fed should, according to Waller, preempt such a scenario.
Bowman, on June 23rd, dismissed concerns that President Donald Trump’s tariffs would trigger inflation, saying that, provided inflationary pressures remain limited, “it is time at the meeting at the end of July” to consider lowering interest rates.
President Trump has repeatedly harshly criticized Fed Chair Jerome Powell for not heeding his calls to immediately cut interest rates. It was Trump who appointed both Waller and Bowman to their roles at the Fed.
Powell’s term expires in May of next year, and Waller is reportedly among the candidates to succeed him.
