Federal Reserve Board Governor Bowman expects interest rates to be cut twice this year to address the weakness in the labor market.

Federal Reserve Governor Bowman said on Tuesday that she expects the Fed to continue cutting interest rates at the remaining two policy meetings in 2025 to address slowing labor market and weakening economic growth. Bowman said at an event in Washington, "I still believe that the Fed will cut interest rates twice before the end of this year." Currently, the Fed's target range for the federal funds rate is 4.00% to 4.25%, marking the first rate cut since December last year, by 25 basis points. According to the dot plot released last month, most officials believe that further monetary easing is appropriate against the backdrop of continued signs of weakness in the labor market. The next monetary policy meeting of the Federal Reserve will be held on October 28-29, with the final meeting scheduled for the second week of December. The futures market is currently betting that the Fed will cut interest rates by 25 basis points at each of the two meetings. Bowman said that as long as the labor market and other economic data evolve "as expected," she believes the Fed will continue on a gradual path of rate cuts. "If the economic situation continues to evolve in the direction I anticipate, we will continue to lower the federal funds rate." Bowman had voted against keeping rates unchanged at the July meeting alongside Governor Waller, calling for an early rate cut. However, she supported the rate cut decision at the September meeting, indicating a gradual convergence of views within the Fed. Both were appointed as Fed governors by President Trump during his first term. They have both repeatedly stated that they believe the tariffs imposed by the Trump administration will not lead to sustained inflationary pressures, with the current policy risks more focused on weakness in the labor market. Yesterday, Philadelphia Fed President Harker also leaned towards implementing two more 25 basis point rate cuts this year and argued that monetary policy should "look through the short-term inflationary effects of tariffs" as such shocks will not lead to sustained inflation. Harker pointed out that current policy is still "slightly tight," and further easing is in line with the latest Summary of Economic Projections (SEP) from the Fed. She warned that the momentum in the U.S. labor market is weakening, third-quarter growth is above trend, but consumption is increasingly reliant on high-income groups.