Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she has penciled in three interest-rate cuts before the end of 2026 with the goal of supporting the labor market, while cautioning that the longer-term economic consequences of the war in Iran remain uncertain.
Speaking in an interview on Fox Business, Bowman said she expects strong economic growth this year and reiterated her view that supply-side policy shifts should begin feeding through the economy. "Of course, I've written three cuts in before the end of 2026 to hopefully support the labor market," she said. On geopolitical developments, she added: "It's too soon to tell what the impacts of Iran and the conflict may be, but I do expect that we'll start to see some of the supply-side policies working their way through the economy."
Bowman's stance stands out as comparatively dovish relative to other Federal Reserve officials. At this week's Federal Open Market Committee meeting, policymakers left the federal funds target range unchanged at 3.5% to 3.75% amid the uncertainty stemming from the Iran war. The committee's projections incorporated a single cut this year and one more next year - a shallower easing path than Bowman has signaled for 2026.
Her comments also underscored continuing concern about labor market conditions. "I'm still concerned about...the job market," Bowman said in the interview, pointing to employment as a key consideration in her policy outlook.
Beyond interest-rate expectations, Bowman addressed regulatory changes and financial stability. She praised plans unveiled this week that would relax capital requirements for the largest Wall Street lending firms, saying such adjustments could free up substantial sums for lending activity, share repurchases and dividend payments.
On systemic threats, Bowman identified cyber risk as a particular worry that could materialize sooner than problems arising in private credit markets or from leveraged lending. Her comments suggest heightened attention to operational and technological vulnerabilities within the financial sector.
Bowman's remarks present a mix of policy preferences and prudential priorities - advocating for a more aggressive easing path in 2026 to shore up jobs while supporting measures intended to unlock capital for banks and warning of near-term non-credit risks to the system.