The chances of the Fed cutting rates during its next Federal Open Market Committee (FOMC) meeting in July have jumped following comments from Fed Governor Michelle Bowman. The odds of the Fed cutting by 25 basis points are now 24.8% compared to 14.5% yesterday and 14.4% a week ago.
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“Should inflation pressures remain contained, 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,” said Bowman in prepared remarks on Monday.
Inflation Falls as Two Fed Officials Support a July Rate Cut
Inflation is on its way down and has shown no signs of being driven higher by President Trump’s tariffs, at least not for now. May’s consumer price index (CPI) inflation report showed a 2.4% year-over-year rise, falling closer to the Fed’s goal of 2%.
Last week, Fed Governor Christopher Waller said that the central bank is “in the position” to cut rates in July. He warned that the Fed shouldn’t wait for a labor market crash before cutting rates.
The S&P 500 (SPX) is trading higher on Bowman’s comments as rate cuts can stimulate the economy by lowering the cost to borrow for both businesses and individuals.
