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Michelle Bowman, the Fed’s director, suggested on Friday that the labor market could receive increased focus when determining US interest rates, in response to a survey at a conference on the impact of Fed policies on the economy.
The US job market added 151,000 jobs in February, based on Payroll data published on Friday. The numbers were lower than anticipated but still showed strength in the market.
Data not discussed by Bowman suggest that the Federal Reserve should delay lowering the US base interest rate until June. Analysts now anticipate three rate cuts by the end of 2025 following the Payroll release, whereas the previous forecast had suggested cuts would occur in May.
Bowman mentioned at a monetary policy forum in New York that while the FOMC has been concentrating on decreasing inflation, he desires the labor market and economic activity to gain more significance in discussions as they move closer to the 2% target.
The director has raised doubts about decisions relying heavily on labor market data in several past speeches, citing the frequent and extensive revisions. Bowman has also indicated worries regarding inflation.
The director mentioned that he prefers to hold off on making decisions until there is more clarity on the policies of U.S. President Donald Trump and their impact on the economy.
Powell believes there is no rush to make changes to interest rates by the Fed.
Jerome Powell, the President of the Fed, acknowledged an escalation in uncertainty regarding the US economic outlook but emphasized that monetary authorities do not need to rush in making adjustments to monetary policy.
“Despite the considerable uncertainty, the US economy remains in a favorable position,” Powell stated at an event in New York organized by the University of Chicago.
“We can afford to be patient and wait for more information,” he said, as reported by “Bloomberg”.
Recent economic signals indicate that U.S. household spending could slow down, and studies with families and businesses show increased uncertainty about the economic outlook, according to Powell.
The president of the Federal Reserve mentioned the need to understand the potential impact of these changes on future spending and investments. He also noted that progress in lowering inflation is ongoing, albeit inconsistently.
Powell stated that the progress towards achieving the goal of sustainable inflation has been inconsistent, but they aim for this trend to persist. They will focus on advancing in areas like housing services and market-based components of non-residential services.
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