Fed Governor Michelle Bowman calls for decisive FOMC action to support jobs

Federal Reserve Governor Michelle Bowman said policymakers are in danger of falling behind the curve and need to act decisively to bring down interest rates as the labor market weakens.

Bowman, who was appointed to the Fed by President Donald Trump and is the central bank’s top bank regulator, also warned the Federal Open Market Committee may need to lower rates more quickly in the months ahead.

“Now that we have seen many months of deteriorating labor market conditions, it is time for the committee to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility,” Bowman said Tuesday in a speech to the Kentucky Bankers Association’s annual convention.

“In my view, the recent data, including the estimated payroll employment benchmark revisions, show that we are at serious risk of already being behind the curve in addressing deteriorating labor market conditions,” Bowman said. “Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward.”

Bowman voted with the majority of her colleagues when Fed officials cut their benchmark interest rate by a quarter percentage point on September 17. Policymakers also pencilled in two more quarter-point reductions this year, based on their median projection, following months of pressure from the White House to slash borrowing costs.

Bowman in August said she favored three quarter-point interest-rate cuts this year and had urged her fellow policymakers to begin cutting since their June meeting.

Her remarks were not far off the views expressed by Trump’s newest appointee to the Fed, Governor Stephen Miran. In a speech Monday, Miran argued that interest rates should be much lower to prevent damaging the economy and called for a series of outsize cuts.

Chair Jerome Powell pointed to growing signs of weakness in the labor market to explain why officials decided it was time to cut rates after leaving them unchanged since December. Policymakers had held rates steady amid concerns over tariff-driven inflation.

Bowman said she has grown more confident that tariffs will have a “small and short-lived” impact on inflation.

Several other Fed officials have expressed continued worries over inflation, including some who backed last week’s cut. Chicago Fed President Austan Goolsbee, speaking earlier on Tuesday, said the Fed should be cautious about making additional rate reductions.

“Eventually, at a gradual pace, rates can come down a fair amount if we can get this stagflationary dust out of the air,” Goolsbee said Tuesday in an interview with CNBC, referring to the scenario in which growth stagnates and inflation is high.

Also speaking on Tuesday, Atlanta Fed President Raphael Bostic said the US central bank must remain on guard against price pressures.

“Not having been at target for over four-and-a-half years, we definitely need to be concerned about it,” Bostic said on the Macro Musings podcast, hosted by David Beckworth of the Mercatus Center at George Mason University. “I think it’s incumbent upon us to continue to stay vigilant in the fight against inflation.”

Bowman also cautioned against overemphasizing the latest data points, which she said could impede the policy-making process.

“A strict interpretation of data dependence is inherently backward looking and would guarantee that we remain behind the curve, requiring us to overcorrect in the future,” Bowman said. “I think we should consider reframing our focus from overweighing the latest data to a proactive forward-looking approach and a forecast that reflects how the economy is likely to evolve going forward.”

Bowman, a former community banker who was appointed to the Fed in 2018 by President Donald Trump, is under consideration to serve as chair of the central bank when the position opens next year, Bloomberg News reported in August. Treasury Secretary Scott Bessent, who is running the search, is in the process of interviewing candidates.