Fed’s Bowman sees risks to job market, says Fed 'should be ready' to cut rates

Core Viewpoint - The Federal Reserve should be prepared to cut interest rates further due to "signs of fragility" in the job market, as indicated by Vice Chair for Supervision Michelle Bowman [1] Labor Market Conditions - There are indications of a weakening job market, with a recent drop in job openings and softness in hiring potentially leading to a rise in unemployment [1][2] - Private-sector job gains averaged only about 30,000 per month in the fourth quarter, which is insufficient to prevent an increase in the unemployment rate [3] - The majority of job gains have been in the healthcare and social services sectors, suggesting a gradual softening in hiring since early last year [3] Interest Rate Policy - The central bank should proactively set interest rates based on forecasts rather than relying heavily on recent data, which may lead to being behind the curve [4] - Bowman's views contrast with other Fed officials who do not see the necessity for further "insurance" cuts to protect the job market [4] Inflation Outlook - The Fed's preferred inflation index, the Personal Consumption Expenditures Index on a core basis, was estimated at 2.9% in December, with adjustments for tariffs suggesting it could be closer to the 2% target [5] - The economy is expected to continue expanding at a solid pace, with the labor market stabilizing near full employment as interest rates become less restrictive [6]