Fed Vice Chair Michelle Bowman Calls for More Rate Cuts as U.S. Labor Data Disappoints

Michelle Bowman has called for more Fed rate cuts amid the new jobs report. The jobs data came in lower than projected by experts, highlighting that the labor market is weak.

Weak Job Data Calls for More Fed Rate Cuts, Michelle Bowman Says

According to Bloomberg, Federal Reserve Vice Chair for Supervision Michelle Bowman said the weak February jobs report has shifted her back to favoring rate cuts.

“I was fine with holding at our January meeting, but now that we’ve seen that the labor market, maybe that was an anomaly,” Bowman said. “This confirms to me that the labor market continues to be weak, and it could use some support from our policy rate.”

The U.S. labor market unexpectedly lost 92,000 jobs in February. This is while the unemployment rate rose to 4.4%, the Bureau of Labor Statistics said in a report released on Friday. This suggests a weak labor market, which calls for more Fed rate cuts.

This comes just after Federal Reserve Governor Chris Waller stated that his vote for the Fed rate cut in March would depend on the February jobs report. He added that he would vote for a rate cut if the upcoming jobs report undermines the notion of a labor market turnaround and continues to show weakness, like the market did last year.

Meanwhile, BitMEX Co-founder Arthur Hayes stated that a rate cut by the Fed might become more probable if the US increases its military activities in Iran. Hayes also noted that the prolonged conflict in the Middle East often leads the US Federal Reserve to a loose monetary policy.

Views Split on Further Interest Rates

Fed officials are expected to gather for their next policy meeting in Washington on March 17-18 to decide its next move. In the last FOMC meeting minutes,  several participants stated that additional rate cuts may be warranted if inflation declines in line with their expectations.

However, some participants opined that it may be appropriate for the Fed to keep the interest rate unchanged for some time and closely monitor the economic data. After the report, expectations of a rate cut by the Fed quickly adjusted.

The probability of the Fed making a change in March increased by 2% points to 4.7%. Some prediction markets also showed a small adjustment in policy.

Just to add, Fed’s chair Jerome Powell had said after the last meeting that next cuts would depend largely on labor market conditions. There could be more shifts in support over the next couple of days.