Michelle Bowman, a governor on the Federal Reserve Board, became the first Fed official since 2005 to vote against the central bank’s interest rate decision when she dissented Wednesday against the Fed’s move to cut rates by 50 basis points.
Bowman was the only Fed governor to break with the 11 other voting members who cast their ballots in favor of the Federal Reserve’s move to slash interest rates by half a percentage point. It marked the central bank’s first rate reduction after a nearly two-and-a-half-year crusade against inflation during the COVID-19 pandemic.
Bowman preferred a quarter-point rate cut, the Fed said. She has expressed concerns in the past that the war against inflation has not fully ended, The Associated Press reported.
Opposition from Fed governors was seen more often prior to 1995, whereas Fed chairs in recent years have typically been able to build consensus among policymakers on decisions and often avoid public disagreement.
The new federal funds rate is 4.75 percent to 5 percent, in the Fed’s most pointed signal that its fight against inflation is nearing an end. The pandemic had a ripple effect on the economy, closing stores, disturbing supply chains and prompted the layoffs of millions of Americans.
Federal Reserve Chair Jerome Powell on Wednesday noted the Fed is not declaring a full victory over inflation yet, though it is closer than it has been before.
“We know that it is time to recalibrate our [interest rate] policy to something that’s more appropriate given the progress on inflation,” Powell said in a news briefing. “We’re not saying, ‘mission accomplished’ … but I have to say, though, we’re encouraged by the progress that we have made.”
Bowman joined the Federal Reserve Board in 2018 when she was appointed by former President Trump. Prior to her appointment, she served as the state bank commissioner of Kansas from January 2017 to November 2018 and served as vice president of Farmers & Drovers Bank in Kansas from 2010 to 2017.