Fed's Michelle Bowman Backs Further Policy Easing Amid Labor Market Fragility

03:45 PM EST, 01/16/2026 (MT Newswires) -- The Federal Reserve should keep the door open to interest rate cuts amid a fragile labor market, Vice Chair for Supervision Michelle Bowman said Friday.

While the US economy continues to grow at a strong pace, the labor market has become "increasingly more fragile," Bowman said in prepared remarks for delivery in Massachusetts. The job market could continue to deteriorate over the coming months, she said.

Nonfarm payrolls rose less than expected in December, while estimates for the prior two months were downgraded, the Bureau of Labor Statistics said last week.

"Absent a clear and sustained improvement in labor market conditions, we should remain ready to adjust policy to bring it closer to neutral," Bowman said.

Markets widely expect a Fed pause at its first policy meeting of the year later this month. Bowman voted in favor of all three consecutive interest rate cuts totaling 75 basis points that the Fed delivered last year.

"We should also avoid signaling that we will pause without identifying that conditions have changed," she said. "Doing so will indicate that we are not attentive or responsive to the recent and expected path of the labor market."

Bowman expects inflation to ease toward the central bank's 2% target, given waning price pressures from tariffs.

On Tuesday, President Donald Trump called on Fed Chair Jerome Powell to cut interest rates "meaningfully" following official data showed consumer price growth held steady year over year last month. Trump has repeatedly criticized Powell as the Fed took a cautious view on lowering rates.

Powell faces a criminal probe linked to his testimony regarding office building renovation. Powell suggested the investigation reflected continued efforts by the Trump administration to influence monetary policy.

"With inflation on a sustained trajectory toward 2% and signs of fragility in the labor market, my view is that we should continue to focus on risks to our employment mandate and preemptively stabilize and support labor market conditions," said Bowman, who sees policy as "moderately restrictive."

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.