Fed Governor Michelle Bowman: “The Economy Needs Substantial Rate Cuts — Monetary Policy Is Dragging on Growth”

2025-11-26 05:45:16

In remarks delivered on November 25, 2025, Federal Reserve Governor Michelle Bowman made one of the most dovish statements from a sitting Fed official this year, declaring that “the economy needs substantial interest-rate cuts” and that current restrictive monetary policy is actively weighing on growth.

Key Quotes from Governor Bowman

“Monetary policy is dragging on the economy.”
“We need to move rates down substantially to a neutral level as soon as possible.”
“I hope upcoming employment data will convince my colleagues that further rate cuts are necessary.”
“It is very difficult to quantify the impact of artificial intelligence on the economy right now, which adds uncertainty to the outlook.”

Bowman, traditionally viewed as one of the more hawkish voices on the FOMC, emphasized that the labor market has cooled faster than many anticipated and that the risks of overtightening now outweigh inflation concerns.

Market Reaction

Following her comments:

December 2025 rate-cut probability on the CME FedWatch Tool jumped from 49% to 68% within hours.
U.S. 2-year Treasury yields fell 12 basis points to 4.08%.
The S&P 500 rallied 1.2% and Bitcoin briefly reclaimed $89,000.

Context Within the Fed

Bowman’s shift is notable because she has frequently dissented against previous rate cuts in 2025. Her change in tone adds significant weight to the dovish camp ahead of the December 16–17 FOMC meeting, especially after recent comments from Governors Waller and Daly also supported further easing.

Analysts now see a growing consensus that the Fed will deliver at least a 25 bps cut in December, with some desks pricing in a 50 bps move if upcoming payrolls data (delayed due to the government shutdown) come in weak.

In summary, Governor Michelle Bowman’s call for “substantial rate cuts” and warning that current policy is “dragging on the economy” represents one of the clearest dovish pivots from a traditionally hawkish FOMC member, dramatically raising the odds of aggressive easing before year-end.

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