Prompts winter weather advisories as cold air moves in Friday night

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

A top official at the Federal Reserve said Saturday that this month's stunning, 

weaker-than-expected report on the U.S. job market

 is strengthening her belief that interest rates should be lower.

Michelle Bowman was one of two Fed officials who voted a week and a half ago in favor of cutting interest rates. Such a move could help boost the economy by making it 

cheaper for people to borrow money to buy a house

 or a car, but it could also threaten to push 

Bowman and a fellow dissenter lost out after 

nine other Fed officials voted to keep interest rates steady

, as the Fed has been doing all year. The Fed's chair, Jerome Powell, has been adamant that he wants to wait for more data about how 

 are affecting inflation before the Fed makes its next move.

At a speech during a bankers' conference in Colorado on Saturday, Bowman said that “the latest labor market data reinforce my view” that the Fed should cut interest rates three times this year. The Fed has only three meetings left on the schedule in 2025.

The jobs report that arrived last week, only a couple of days after the Fed voted on interest rates, showed that employers hired far fewer workers last month than economists expected. It also said that hiring in prior months was much lower than initially thought.

On inflation, meanwhile, Bowman said she is getting more confident that Trump's tariffs “will not present a persistent shock to inflation” and sees it moving closer to the Fed's 2% target. Inflation has come down substantially since hitting a peak above 9% after the pandemic, but it has been stubbornly remaining above 2%.

The Fed’s job is to keep the job market strong, while keeping a lid on inflation. Its challenge is that it has one main tool to affect both those areas, and helping one by moving interest rates up or down often means hurting the other.

A fear is that Trump's tariffs could box in the Federal Reserve by sticking the economy in a worst-case scenario called “stagflation,” where the economy stagnates but inflation is high. The Fed has no good tool to fix that, and it would likely have to prioritize either the job market or inflation before helping the other.

On Wall Street, expectations are that the Fed will have to cut interest rates at its next meeting in September after the U.S. jobs report came in so much below economists' expectations.

Trump has been calling angrily for lower interest rates, often 

 while doing so. He has the opportunity to 

Business and Economic News

Homepage

The Associated Press

Author

A top official at the Federal Reserve is saying that this month’s stunning, weaker-than-expected report on the U.S. job market is strengthening her belief that interest rates should be lower.

A top Federal Reserve official says dour jobs data backs the case for 3 rate cuts

Go Deeper.

Like this?