US Jobs report confirms ‘signs of fragility’ in market: Fed official

A recent US employment report confirmed “signs of fragility” in the labour market, a senior central bank official said on Saturday, backing three interest rate cuts this year to guard against further weakening.

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In prepared remarks to a summit in Colorado, Federal Reserve Vice Chair for Supervision Michelle Bowman called for a “proactive approach” in lowering the benchmark lending rate.

Doing so “would help avoid a further unnecessary erosion in labor market conditions” and reduce the chance that the Fed's rate-setting committee will need to make a larger cut if the jobs market worsened further, she said.

Bowman also made the case that price increases from President Donald Trump's sweeping tariffs this year will likely represent “a onetime effect.”

She expects inflation will return to the Fed's two-percent target after the tariff effects dissipate.

“It is appropriate to look through temporarily elevated inflation readings and therefore remove some policy restraint to avoid weakening in the labor market,” she added in the remarks.

Bowman was one of two Fed governors to dissent at the central bank's July policy meeting, a rare occurrence even as officials voted to hold rates steady for a fifth straight gathering.

Her latest remarks underscore growing divisions among Fed policymakers about when the independent central bank should begin slashing rates again.

The Fed has come under intense pressure from Trump recently, as the president repeatedly lambasts Fed Chair Jerome Powell for its decisions to keep rates unchanged.