Federal Reserve Governor Michelle Bowman on Saturday acknowledged that the latest reading on the unemployment rate was “notably higher than a year ago,” but also cautioned against “overreacting to any single data point.”
The July nonfarm payrolls report earlier this month sharply upended the narrative around monetary policy, stoking fears about a recession in the U.S. and sparking concerns that the Fed had waited too long to cut interest rates.
The Fed on the final day of July held the federal funds rate steady, but indicated that a September rate cut was on the table. According to the CME FedWatch tool, the odds of a 25 basis point cut and a 50 basis point cut in September was almost nearly even.
Fed speakers this week said the jobs report indicated that the central bank’s dual mandate was coming into better balance. But they did not shed much light on policy prospects
“My baseline outlook is that inflation will decline further with the current stance of monetary policy. Should the incoming data continue to show that inflation is moving sustainably toward our 2 percent goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment,” Bowman said in prepared remarks at an event sponsored by the Kansas Bankers Association.
“But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point. Instead, we must view the data in their totality as the risks to the Committee’s employment and price-stability mandates continue to move into better balance,” Bowman added.
Bowman is a voting member of the Federal Open Market Committee, and is considered one of the biggest hawks among policymakers.
