Fed Governor Michelle Bowman was one of two Fed officials to vote in favor of a rate cut during the July Federal Open Market Committee (FOMC) meeting. Now, Bowman is warning that the labor market and economy are showing signs of weakness.
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“I remain cautious about taking too much signal from data releases, but I see the latest news on economic growth, the labor market, and inflation as consistent with greater risks to the employment side of our dual mandate,” said Bowman while giving a speech in Colorado, adding that she is considering three rate cuts this year. Each rate cut is equivalent to 25 bps.
Bowman Calls on Fed to Take ‘Proactive Approach’
Bowman explained that a “proactive approach” to monetary policy could combat further labor market deterioration and reduce the chance that the Fed will be forced to implement larger rate cuts in the future.
The market is pricing in a 43.9% chance of three rate cuts and a 43.5% chance of two rate cuts by the end of the year, according to CME’s FedWatch tool. There is also an 11.7% chance of just one rate cut.
July’s Consumer Price Index (CPI) is set to be released tomorrow at 8:30 a.m. Eastern Time, providing the Fed with another key data point in deciding where the federal funds rate should be.
Track the CPI and other key events with TipRanks’ Economic Calendar.
