Fed's Bowman Votes to Pause Rate Cuts, Cites Data Gaps

U.S. Federal Reserve Vice Chair for Supervision Michelle Bowman stated on Friday, January 30, 2026, that she still believes interest rates should decrease. However, she voted to hold monetary policy steady this week to gather additional data before the next reduction in borrowing costs.

Bowman anticipates three quarter-percentage-point rate cuts in 2026. The decision to pause after three consecutive rate trims in late 2025 was about the timing of the next move. She explained the choice was between continuing to remove policy restraint by April or adopting a more measured pace throughout the year.

Bowman's analysis of economic risks, with inflation moving towards 2% but the job market showing weakness, supports looser monetary policy. She acknowledged some stabilization in the job market but cited data gaps from the previous fall's government shutdown as a reason to wait until the March 17-18 meeting to consider lowering the policy rate from its current 3.50%-3.75% range.

Despite her concerns about labor market deterioration, Bowman agreed that signs of stabilization warrant a brief pause to "keep policy powder dry." This allows for careful assessment of how current policy restraint impacts financial conditions and strengthens the labor market. She stressed that the pause should not imply an extended period of maintaining the current stance, as the Fed voted 10-2 to hold rates steady.