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Fed Officials Signal September Rate Cut After Revised Jobs Show Cooling Labor Market

Weaker labor figures have emboldened policymakers to plan for September rate cuts pending clearer evidence on tariffs’ effects on inflation.

Vice Chair for Supervision of the Federal Reserve Board of Governors Michelle W. Bowman moderates a discussion with OpenAI CEO Sam Altman (not pictured) during the Federal Reserve's Integrated Review of the Capital Framework for Large Banks Conference in Washington, D.C., U.S., July 22, 2025. REUTERS/Ken Cedeno
FILE - Michelle Bowman, Vice Chair for Supervision of the Federal Reserve Board of Governors, takes a seat for an open meeting of the Board of Governors at the Federal Reserve, in Washington, June 25, 2025. (AP Photo/Mark Schiefelbein, File)
A Chipotle restaurant advertises it is hiring in Cambridge, Massachusetts, U.S., August 28, 2023. REUTERS/Brian Snyder/File Photo
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Overview

  • Labor Department revisions show job gains slowed to a three-month average of 35,000 and unemployment ticked up to 4.2%, highlighting labor-market fragility.
  • Vice Chair Michelle Bowman said the weak jobs data reinforce her forecast for three interest-rate cuts in 2025 and urged easing to begin in September.
  • Several regional Fed presidents, including Mary Daly and Raphael Bostic, have voiced openness or impatience for a rate cut as soon as the next meeting.
  • Financial markets have priced in significant policy easing by year-end, betting on at least a half-percentage-point reduction in rates.
  • Chair Jerome Powell maintains a data-dependent stance, emphasizing the need to assess the inflationary impact of new tariffs before cutting rates.