Bowman says Fed should be ready to cut rates again amid job market risks

Core Viewpoint - The Federal Reserve should be prepared to cut interest rates again due to a fragile job market that could deteriorate quickly [1][3]. Group 1: Labor Market Conditions - The job market is currently near full employment but has become increasingly fragile, with potential for further deterioration in the coming months [3]. - Federal Reserve Vice Chair for Supervision Michelle Bowman emphasized the need for the Fed to remain nimble in its policy approach due to the rapidly changing job market conditions [3]. Group 2: Monetary Policy Stance - Bowman's current assessment of monetary policy is that it is "moderately restrictive," and she advocates for a forward-looking approach in setting interest rates [4]. - The Fed's monetary policy is not on a preset course, and there is a need to avoid signaling a pause in rate cuts without clear evidence of changing conditions [2]. Group 3: Economic Outlook - The baseline expectation is for economic activity to continue expanding at a solid pace, with the labor market stabilizing near full employment as monetary policy becomes less restrictive [2]. - Risks to the Fed's inflation and job mandates are uneven, with expectations that price pressures will moderate as the impact of trade tariffs diminishes [2]. Group 4: Recent Actions and Future Expectations - In late 2025, the Fed lowered its benchmark interest rate by three-quarters of a percentage point to the 3.50%-3.75% range to support a weakening job market while still addressing high inflation pressures [6]. - Fed officials have indicated no urgency to act at the start of 2026, as they seek further evidence that inflation, which remains above the 2% target, will decrease [7].