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Fed's Bowman: Latest jobs data stiffens support for three rate cuts this year

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Fed's Bowman: Latest jobs data stiffens support for three rate cuts this year

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update 2025.08.11 07:57
Fed's Bowman: Latest jobs data stiffens support for three rate cuts this year

update 2025.08.11 07:57

Federal Reserve (Fed) Governor Michelle Bowman said on Saturday that the latest weak labor market data underscores her concerns about labor market fragility and strengthens her confidence in her own forecast that three interest rate cuts will likely be appropriate this year.

Key quote

The apparent weakening in the labor market outweighs the risks of higher inflation to come.

Expects to support three rate cuts over the Federal Reserve's three remaining meetings this year.

With economic growth slowing this year and signs of a less dynamic labor market becoming clear, I see it as appropriate to begin gradually moving our moderately restrictive policy stance toward a neutral setting.

Market reaction

At the time of writing, the US Dollar Index (DXY) is trading unchanged on the day to trade at 98.26.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials - the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed's weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.


Date

Created

 : 2025.08.11

Update

Last updated

 : 2025.08.11

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