Fed Official Warns of Labor Market Fragility, Supports Rate Cuts
A senior Federal Reserve official said recent job data shows early signs of fragility in the U.S. labor market. While the overall job situation still appears stable, the official noted reduced hiring and downward revisions to past months as reasons for concern.
Calls for Proactive Action
The official advocated for a proactive approach by the central bank to consider lowering interest rates. They cautioned that acting early might prevent deeper economic weakening and safeguard jobs.
Inflated Prices May Be Temporary
The price increases resulting from this year’s tariffs are viewed as temporary. The official expects inflation to trend back toward the Fed’s 2% target once those effects ease. This reinforces the case for easing some policy restrictions to shield the labor market.
Growing Division Within the Fed
This view reflects a divide within the Federal Reserve. While some policymakers remain cautious about inflation risks, others are pushing for rate cuts—especially as signs emerge of a weakening job market. Recent data shows the unemployment rate ticked up to 4.2%, heightening expectations for a rate reduction as early as September.
