A second Federal Reserve official has indicated that the central bank should begin cutting rates as soon as next month — the latest sign of division among policymakers about how to respond to the uncertainty caused by President Trump’s shifting economic policies.
Michelle W. Bowman, the Fed’s vice chair for supervision, said on Monday that with inflation cooling and the labor market showing signs of weakness, “it is time to consider adjusting” interest rates to avoid putting too much downward pressure on economic growth.
“Should inflation pressures remain contained,” Ms. Bowman said in a speech in Prague, “I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.”
Ms. Bowman’s remarks followed similar comments from Christopher J. Waller, a Fed governor, who in an interview with CNBC on Friday said that policymakers should not wait for the labor market to weaken before lowering borrowing costs.
The two officials’ comments appear to put them at odds with Jerome H. Powell, the Fed chair, who last week stressed that the central bank could remain patient as it waited to see the impact of Mr. Trump’s tariffs and other economic policies. Those policies are widely expected to push up prices in the months ahead.
“Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs because someone has to pay for the tariffs,” Mr. Powell said on Wednesday in his customary news conference following the Fed meeting.
Tariffs pose a challenge for central banks because they tend to lead to higher prices — which ordinarily lead policymakers to raise interest rates — but also to slower growth, which normally call for lower rates. Mr. Powell hinted he was more focused on the risk of inflation right now, partly because the labor market has so far remained solid.
“The labor market is not crying out for a rate cut,” he said.
Mr. Powell’s caution has angered Mr. Trump, who has railed against the Fed chair on social media and demanded that he move more quickly to lower rates. Ms. Bowman and Mr. Waller were both appointed to their positions by Mr. Trump, and Mr. Waller, in particular, is often spoken about as a potential candidate to succeed Mr. Powell when his term as chair ends next year.
Ms. Bowman and Mr. Waller joined Mr. Powell and other officials in voting to hold interest rates steady at last week’s Fed meeting. But in their recent comments, they said they did not expect tariffs to have a significant impact on inflation — a position that puts them at odds not only with Mr. Powell but also with many private-sector forecasters.
“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,” Ms. Bowman said Monday. She noted that measures of economic policy uncertainty, which hit record highs in recent months, have eased somewhat.
Ms. Bowman said she also did not expect tariffs to act as a significant drag on economic growth. But, she said, she is nonetheless concerned that cracks are beginning to show in the labor market.
“While still strong, the labor market appears to be less dynamic,” she said, adding that policymakers, “should put more weight on downside risks to our employment mandate going forward.”
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
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