Fed’s Bowman Signals Three Rate Cuts After Disappointing Job Data
(MENAFN) Fed Vice Chair for Supervision Michelle Bowman expressed on Saturday that the disappointing U.S. employment figures strengthen her belief that three interest rate reductions will likely be necessary this year.
The Bureau of Labor Statistics reported that only 73,000 jobs were added in July, significantly missing market forecasts. Concurrently, the unemployment rate inched up to 4.2 percent from June’s 4.1 percent.
In a speech at the Kansas Bankers Association 2025 CEO & Senior Management Summit in Colorado, Bowman emphasized, "A proactive approach in moving policy closer to neutral, from its current moderately restrictive stance, would help avoid a further unnecessary erosion in labor market conditions and reduce the chance that the (Federal Open Market) Committee will need to implement a larger policy correction should the labor market deteriorate further."
At the Federal Reserve’s late July meeting, the central bank maintained the federal funds rate target between 4.25 and 4.5 percent—a level held steady since December. Bowman was among two officials dissenting against this decision.
While most Fed members have favored caution on rate cuts, citing risks that widespread tariffs on U.S. trade partners might fuel inflation, Bowman views these tariff-driven price rises as likely a "one-time effect." She added that inflation will revert to the Fed’s 2 percent goal once these impacts fade.
"Because changes in monetary policy take time to work their way through the economy, it is appropriate to look through temporarily elevated inflation readings and therefore remove some policy restraint to avoid weakening in the labor market," Bowman said.
The Fed’s calendar includes three remaining policy meetings this year—in September, October, and December.
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