ISTANBUL

Michelle Bowman, deputy chair for Supervision at the Fed, and Christopher Waller, board member, cited growing concerns about the labor market as the reason for voting to cut interest rates at this week's meeting.

According to the Fed on Friday, Bowman and Waller explained their opposition in separate statements to the Fed's decision to hold the policy rate steady at the Federal Open Market Committee (FOMC) meeting held on July 29-30.

Bowman stated that, given the slowdown in economic growth this year and signs that the labor market is less dynamic, it is appropriate to begin gradually shifting monetary policy from its mildly restrictive stance toward a neutral level.

She believed that such a step would provide proactive protection against further weakening of the economy and potential damage to the labor market.

"I see the risk that a delay in taking action could result in a deterioration in the labor market and a further slowing in economic growth," she said.

Inflation has significantly approached its targets when temporary tariff-related effects are excluded, she said, noting that the labor market is operating close to full employment.

Fed Board Member Waller also expressed respect for other FOMC members' "wait and see" approach to assessing the impact of tariffs on inflation but believes it is overly cautious, fails to balance risks, and may cause monetary policy to lag behind.

Waller noted that the price impact of tariffs has been limited so far and warned that the labor market could weaken sooner because there will be no clarity on the level of tariffs or their ultimate impact in the coming months.

He noted that when the labor market weakens, this typically happens quickly.

"If we find ourselves needing to support the economy, waiting may unduly delay moving toward appropriate policy," he said.

Waller noted that an interest rate cut could be made now, and the data could be monitored.

He added that if the tariffs do not cause a significant shock to inflation, they could continue to lower interest rates at a moderate pace.

On Wednesday, the Fed kept its policy rate unchanged, in line with expectations.

The Fed announced that the decision to hold the interest rate steady was made by a vote of 9 to 2.

After the decision, President Trump criticized Fed Chair Powell, calling him "TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job."

Trump urged the Fed board to "assume control" and do "WHAT EVERYONE KNOWS HAS TO BE DONE."