According to a report from Reuters, The Federal Reserve’s vice chair of supervision, Michelle Bowman, on Saturday said recent weak job data underscores her concerns about labor market fragility and strengthens her confidence in her own forecast that three interest-rate cuts will likely be appropriate this year.
Bowman was one of two Fed governors to dissent last month against the U.S. central bank’s decision to leave short-term borrowing costs in the 4.25%-4.50% range where they have been since December.
Most Fed officials have been more cautious about lower rates given the potential they see that the Trump administration’s tariffs could disrupt progress on getting inflation down to the Fed’s 2% goal. In recent days, however, several Fed policymakers appear to have moved closer to supporting cuts.
“Taking action at last week’s meeting would have proactively hedged against the risk of a further erosion in labor market conditions and a further weakening in economic activity,” Bowman said in remarks prepared for delivery to the Kansas Bankers Association. Bowman’s remarks leaned even more heavily into her concerns about a labor market downturn than reflected in her post-meeting explanation of her policy vote.
The Labor Department’s monthly employment report last Friday showed the unemployment rate rose to 4.2% — “close to rounding up to 4.3%” was how Bowman described it Saturday. The report also included revisions to previously published data, showing that job gains slowed sharply over the last three months to a monthly average of 35,000.
“This is well below the moderate pace seen earlier in the year, likely due to a significant softening in labor demand,” Bowman said. “My Summary of Economic Projections includes three cuts for this year, which has been consistent with my forecast since last December, and the latest labor market data reinforce my view.”
Click here to read the full report from Reuters. Please note there is a paywall.
