On August 9, the Fed’s Vice Chair for Supervision, Michelle Bowman, addressed an audience where she discussed the U.S. economic outlook, monetary policy, and regulatory priorities for community banks.
Bowman explained her recent dissent at the Federal Open Market Committee meeting to the Committee’s decision to hold the federal funds rate at its current level, advocating instead for a gradual reduction in the federal funds rate due to signs of slowing economic growth and increased fragility in the labor market. Bowman noted that inflation is moving closer to the Fed’s two percent target and emphasized the importance of balancing risks to both price stability and employment.
Separately, Bowman highlighted the role of community banks in supporting local economies and described ongoing regulatory reform efforts, including possible changes to the community bank leverage ratio. She also addressed liquidity sources, capital options for mutual banks, and the need for practical regulatory relief. Bowman noted the growing threat of fraud, particularly with the use of AI, and encouraged industry stakeholders to participate in the Fed’s request for information on payments and check fraud.
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