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Rate Cut Unlikely Before August, Fed Governor Says

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  Published in Stocks and Investing on Wednesday, February 25th 2026 at 11:55 GMT by The Financial Times
      Locales: UNITED STATES, UNITED KINGDOM, IRELAND

Bozeman, Montana - February 25th, 2026 - Federal Reserve Governor Christopher Bowman delivered a sobering message to markets on Tuesday, indicating that an interest rate cut is unlikely before August. His remarks, made at a Rotary Club event in Montana, directly challenge increasingly optimistic predictions of a near-term easing of monetary policy. Bowman emphasized that persistent inflation and a resilient labor market necessitate a cautious approach, and more conclusive data is required before considering any reduction in interest rates.

Speaking to the Rotary Club, Bowman stated plainly, "I need to see more data to confirm that inflation is sustainably moving toward our 2 percent target." He reiterated the Federal Reserve's commitment to price stability, explaining that current economic conditions do not support a shift in policy. "With inflation remaining well above our goal and the labor market still quite strong, I don't believe it would be appropriate to cut rates before then."

Bowman's comments align with a growing chorus of cautious voices within the Federal Reserve. Recent economic reports have revealed a deceleration in the disinflationary trend observed throughout much of 2025. While inflation has fallen from its peak, it remains significantly above the Fed's 2% target, casting doubt on the trajectory towards achieving price stability. This slowdown in disinflation is forcing policymakers to reassess the timing and magnitude of potential rate cuts.

While acknowledging the recent moderation in economic growth, Bowman downplayed its significance, pointing to the continued strength of the labor market. "I'm looking for convincing evidence that inflation is truly under control," he stated, implying that a softening economy alone wouldn't be sufficient to warrant a rate cut if inflationary pressures remain elevated. The labor market, despite some recent signs of cooling, continues to demonstrate robustness, with unemployment remaining historically low.

The Federal Reserve has maintained its benchmark interest rate in a range of 5.25-5.5% for the past six months, a period of assessment following a series of aggressive interest rate hikes throughout 2023 and 2024. These hikes, designed to curb inflation, have demonstrably impacted certain sectors of the economy, most notably housing and business investment. The central bank is now carefully evaluating the lagged effects of these previous actions.

Market expectations, however, have largely anticipated rate cuts beginning as early as May. Bowman's blunt assessment, therefore, represents a significant recalibration of these expectations. Financial markets reacted negatively to his comments, with stock prices dipping slightly and bond yields edging upwards, reflecting a reduced probability of a quick pivot to looser monetary policy. Analysts predict increased volatility in the coming weeks as investors attempt to price in the revised outlook.

The coming week will be particularly crucial, with the release of the Consumer Price Index (CPI) report scheduled for release on March 2nd. This report will provide a fresh snapshot of inflationary pressures and will likely heavily influence the Federal Reserve's decision-making process at its next meeting. A higher-than-expected CPI reading could further solidify the Fed's hawkish stance and push back expectations for rate cuts even further. Conversely, a significant decline in inflation could open the door for a more dovish approach.

Beyond the CPI, other key economic indicators, including employment figures and measures of consumer spending, will also be closely watched. The Federal Reserve is likely to adopt a data-dependent approach, meaning that its decisions will be guided by the evolving economic landscape.

The longer period of higher interest rates raises concerns about the potential for a recession. While the US economy has demonstrated resilience in the face of tightening monetary policy, the cumulative impact of higher borrowing costs could eventually weigh on growth. The Fed faces a delicate balancing act - curbing inflation without triggering a significant economic downturn. Bowman's statements suggest the central bank is prioritizing the former, even at the risk of slower growth.