Michelle Bowman, Vice Chair for Supervision at the U.S. Federal Reserve, has called for a series of three interest rate cuts this year to counter a deteriorating labor market. Speaking at a Kansas Bankers Association event in Colorado, Bowman emphasized the necessity of a proactive monetary policy to address weakening job growth, despite limited inflation concerns.
Bowman's stance comes amid a backdrop of sluggish job growth in the United States, as highlighted by recent labor market data. The U.S. economy added only 73,000 non-farm jobs in July, significantly below the Dow Jones consensus forecast of 100,000. Moreover, job growth figures for May and June were revised downwards by 258,000, underscoring the urgency of policy intervention.
The Vice Chair highlighted that while tariff-induced price hikes are likely to be temporary, inflation is expected to stabilize at 2% once these effects subside. She stressed the importance of timely action, warning that delays in monetary policy adjustments could exacerbate labor market conditions and further impede economic growth.
Previously, Bowman, alongside Fed Governor Christopher Waller, dissented during the Federal Open Market Committee's decision to maintain the benchmark interest rate at 4.25-4.50% for the fifth consecutive session in July. This marked a rare occurrence of dual dissent among Fed governors, a phenomenon not seen since 1993.
Bowman's remarks have intensified speculation on Wall Street regarding an imminent rate cut, especially in light of President Donald Trump's ongoing pressure on the Fed to reduce rates. The market is largely anticipating a rate cut in September, as Bowman's assessment aligns with Wall Street's growing consensus on the need for economic stimulus.
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