Fed’s Bowman says she remains wary of future rate cuts

U.S. Federal Reserve Governor Michelle Bowman on Tuesday expressed caution about future interest rate cuts, citing the risks of higher inflation.

Bowman has been one of the central bank’s most hawkish members, giving few signs of her willingness to support a rate cut at the Fed’s meeting. At the same time, she warned that focusing too much on any single data point could undermine the progress already made in curbing inflation.

“If incoming data continue to show that inflation is moving sustainably toward our 2 percent goal, it will be appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive of economic activity and employment,” she said in prepared remarks to an Alaska banking group.

Bowman touched on the labor market, which the Fed has recently shifted its focus to, saying the discrepancies in the latest jobs report warrant caution. She noted that while hiring strength over the past year may have been overstated, the increase in the unemployment rate may also be exaggerating the extent of labor market weakness.

“The increasing challenges in measurement and the frequency and extent of data revisions over the past few years make the task of assessing the current state of the economy and predicting how it will evolve more challenging,” she said. He said“I will remain cautious in my approach to considering adjustments to the current policy position.”