MNI BRIEF: Fed Should Stand Ready To Ease - Bowman

Federal Reserve Governor Michelle Bowman said Friday the central bank should be ready to ease monetary policy further unless a weakening labor market finds its footing. 

"Absent a clear and sustained improvement in labor market conditions, we should remain ready to adjust policy to bring it closer to neutral. We should also avoid signaling that we will pause without identifying that conditions have changed," Bowman said in prepared remarks. "Doing so will indicate that we are not attentive or responsive to the recent and expected path of the labor market." (See MNI INTERVIEW: Fed's Miran Sees Substantial Rate Cuts In 2026) 

Bowman said she views the current setting of interest rates as "moderately restrictive," indicating she is more concerned about downside risks to the labor market than the threat of an inflation pickup.

"Although the labor market is still near full employment, it has become increasingly more fragile and could continue to deteriorate in the coming months," Bowman said. 

"On inflation, we have seen considerable progress in lowering the underlying trend, considering that still-elevated inflation mostly reflects tariff effects that I expect will fade this year. When those effects are taken into account, core PCE inflation appears to be much closer to 2%."