The official is one of two Federal Reserve governors who dissented last month to the central bank’s decision to not lower interest rates.
Michelle Bowman, the Federal Reserve’s vice chair of supervision, on Aug. 9 said that recent job data corroborates her concerns over labor market fragility and backs up her position that three interest rate cuts should be instituted this year.
Last month, Bowman was one of two Fed governors who dissented against the central bank’s decision to keep short-term borrowing costs in the 4.25 percent to 4.5 percent range that they’ve been in since December 2024.
The other Fed Board of Governors member who dissented was Christopher Waller.
The Federal Reserve has appeared cautious about lowering interest rates, citing uncertainty over President Donald Trump’s tariffs and their impact on reaching the central bank’s 2 percent inflation target. However, in recent days, several Fed officials have appeared more sympathetic to cutting rates.
“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 comments to the Kansas Bankers Association.
Bowman’s remarks delved into her worries about a labor market downturn in more depth than what she expressed in a post-meeting explanation for her dissenting vote on interest rate cuts.
Last Friday, the Labor Department’s monthly employment report showed unemployment rising to 4.2 percent, with it “close to rounding up to 4.3 percent,” as Bowman described it on Saturday. There were also revisions to previously published data in the report, with job gains slowing significantly over the last three months, coming 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.”
The Fed has three policy meetings left this year, scheduled for September, October, and December.
A 100,000 monthly job gain would typically be seen by economists as consistent with a steady-state labor market.
By Jacob Burg
