Fed's Bowman: Worried Fed is behind curve on labor market weakness

Federal Reserve (Fed) Governor Michelle Bowman said on Tuesday that she supported the quarter-point interest rate cut and added that now it's important for the Fed to proactively support the job market, per Reuters.

Key takeaways

"Worried the Fed is behind the curve on labor market weakness, policy may need to adjust faster if risks materialize."

"Important that recent statement included a forward-looking view for further cuts."

"Expect last week's cut a first step towards a more neutral rate if economy evolves as expected."

"If demand conditions do not improve, businesses may begin laying off workers."

"Tariff impact on inflation will fade, inflation is otherwise near target."

"Labor market could deteriorate fast in coming months."

"Concerned housing weakness could lead to accelerating drop in values."

"Will need faster cuts if job market continues worsening."

Market reaction

FXStreet Fed Sentiment Index remains in dovish territory, slightly above 90 after these comments received a dovish score of 3.4 from FXStreet Fed Speech Tracker.

In the meantime, the US Dollar Index remains in a tight daily range at around 97.30.