(Jan 17): Federal Reserve vice chair for supervision Michelle Bowman said monetary policy remains moderately restrictive and officials should be prepared to lower interest rates further unless the employment landscape improves.
Bowman added that the Fed should not signal policy is on hold, as many of her colleagues have done, given the risk of further deterioration in the jobs market.
“Absent a clear and sustained improvement in labour-market conditions, we should remain ready to adjust policy to bring it closer to neutral,” Bowman said in the text of a speech she’s set to deliver on Friday at the New England Economic Forum in Foxborough, Massachusetts.
“We should also avoid signalling that we will pause without identifying that conditions have changed,” she said. “Doing so will indicate that we are not attentive or responsive to the recent and expected path of the labour market.”
Bowman described inflation pressures as easing and helped by a waning impact from tariffs.
“My view is that we should continue to focus on risks to our employment mandate and preemptively stabilise and support labour-market conditions,” she said.
See also: Treasuries slide as Japan bond rout, Danish sales sour sentiment
Fed policymakers last month cut their benchmark interest rate by a quarter percentage point for the third consecutive time, after holding rates steady through much of 2025.
This month, citing signs the US labour market is stabilising amid stubborn inflation, several officials have signalled they’re likely to leave rates unchanged until they have more data on inflation and jobs. Policymakers next meet on Jan 27-28, and futures trading shows investors expect policy to remain on hold.
US employers added fewer jobs than expected in December, capping a yearlong slowdown in the labour market defined by cautious hiring and limited layoffs. Despite that, the unemployment rate ticked down to 4.4%.
Uploaded by Felyx Teoh
