We haven’t heard much from Bowman since she was ruled out as a candidate for Fed Chair.
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US economy has been resilient
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Wage growth consistent with 2% inflation
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Fed has made considerable progress in lowering inflation
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Underlying inflation levels closer to Fed’s 2% target
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Says she is concerned about labor market fragility
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Firms may start shedding workers unless there is demand improvement
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Expects ‘solid’ growth, lower inflation and stabilizing job market
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Given risks, Fed policy should be focused on supporting job market
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Fed policymaking should be forward looking and driven by forecasts
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Inflation pressures are easing as tariff influences abate
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Monetary policy is ‘moderately restrictive’ right now
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Risk to Fed’s mandates is asymmetric, with job risks outweighing inflation concerns
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U.S. central bank should stand ready to cut interest rates again given labor market risks
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Given risks, Fed should not signal a pause in rate-cutting campaign
I thought Bowman might pivot back to being more hawkish after losing her bid for Fed chair but she’s hanging in there. The ‘moderately restrictive’ take is out of consensus with the vast majority of Fed members seeing policy as either within the range of neutral or close.
Her view that the jobs market risks are higher is defensible as most of the employment created in the US last year as in healthcare and AI is certainly a risk to layoffs. That said, the latest economic data has been good and this week’s jobless claims number was the lowest of Trump’s second term.
Most Fed members want to see convincing evidence that inflation is at 2% and it’s just not there, with the upcomign PCE report likely at 3%. She dismisses that by shifting to ‘underlying’ inflation but that same underlying inflation has also been aided by a rapid decline in oil prices that might not be sustainable.
As the year goes on, she will be an interesting voice to monitor because there will be votes that are close calls and she could easily shift back to being a hawk if prices pick up.
