Federal Reserve Governor Michelle Bowman said the Fed is already late to fix the problem and needs to move fast. Speaking at the Kentucky Bankers Association’s 2025 convention, Michelle warned that after months of clear job market weakness, the central bank should not wait any longer to lower interest rates. She said: “Now that we have seen many months of deteriorating labor market conditions, it is time for the committee to act decisively and proactively.” This statement, according to a detailed report originally published by Bloomberg, puts Michelle directly at odds with more cautious voices on the committee. She said recent revisions in employment numbers point to deeper problems. “The recent data, including the estimated payroll employment benchmark revisions, show that we are at serious risk of already being behind the curve in addressing deteriorating labor market conditions,” she told the crowd. She was appointed to the Federal Reserve by President Donald Trump, who’s now back in the White House. Michelle is also the Fed’s lead bank regulator. Her message to the Federal Open Market Committee was:- do more, and do it faster. She also said, “Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward.” Bowman calls out Fed’s delay and pushes for faster cuts Last Wednesday, Michelle joined the majority of her Fed colleagues to support a 25 basis point cut to the benchmark rate, as Cryptopolitan reported . That vote followed months of public and private pressure from the Trump administration. The committee now expects two more similar cuts before the year ends. But Michelle said that’s still not enough. She reminded the audience that since June, she’s been telling other policymakers that they should’ve already started cutting. Back in August, she said she wanted three rate cuts this year. She’s been pushing for more aggressive easing while others on the committee were still holding back. Her view lines up with Trump’s most recent Fed appointee, Governor Steve Miran, who made a speech earlier this week saying the economy was at risk unless interest rates dropped sharply. Steve said the current rate level is too restrictive and called for “a series of outsize cuts.” Federal Reserve Chair Jerome Powell said last week that “growing signs of weakness in the labor market” played a big role in the committee’s decision to finally approve the September cut. On that front, Michelle also said she now believes the inflation effects from tariffs will likely be “small and short-lived.” While that statement shows some optimism, she still stressed the need to focus on the job market first. Goolsbee explains neutral rate and announces labor monitor Not many others are with Michelle on this though. Chicago Fed President Austan Goolsbee said Tuesday on CNBC that while he backed the recent rate cut, the Fed “should be cautious about making additional rate reductions.” He added, “Eventually, at a gradual pace, rates can come down a fair amount if we can get this stagflationary dust out of the air.” But Goolsbee also warned that after four and a half years of inflation running hot, the Fed shouldn’t rush. Even though he’s not ready to speed up cuts, Austan admitted that the Fed’s current policy rate is higher than where it should be long-term. He said the “neutral” rate (that magic number that doesn’t push or pull on the economy) is likely around 3.1%, and he feels “comfortable” with that. Based on the committee’s “dot plot” projections, two more cuts are expected this year, with one cut per year after that. Austan said he’s fine with that timeline, but any additional changes would depend on how things play out in the economy. At the same time, Austan introduced a new labor market monitor developed by the Chicago Fed. It pulls data from 11 sources to track unemployment, layoffs, and hiring in real time. The system predicts September’s unemployment rate will hold steady at 4.3%. That’s still low historically, but it doesn’t cancel out the slowdown in hiring that’s been showing up in recent trends. He said the monitor will provide ongoing forecasts for layoffs and the rate of hiring among unemployed workers. So far, he said, the system is showing “a lot of stability” in the labor market, despite the broader signs of slowdown. Sign up to Bybit and start trading with $30,050 in welcome gifts
