Senior Fed official supports two more interest rate cuts before year-end

(AFP) A top Federal Reserve (Fed) official on Tuesday backed two more interest rate cuts in the remainder of the year as she emphasized that the job market is weakening in the world's largest economy.

"I continue to see two more cuts before the end of this year," Fed Vice Chairwoman for Supervision Michelle Bowman said at an event in Washington.

That proposal would involve the Fed cutting rates during the last two policy meetings this year, in October and December.

Bowman for now projects that the two possible reductions would be 25 basis points.

On Sept. 17, the Fed cut benchmark rates by 25 basis points for the first time in 2025, to between 4% and 4.25%, at a time when the labor market is showing signs of deterioration.

The central bank has a dual mandate from Congress to act independently in combating inflation and unemployment, mainly by raising, lowering or maintaining its benchmark interest rate.

Despite the insistent calls by Donald Trump to lower rates, the Fed's top brass initially held off on the move this year while assessing the impact of tariffs imposed by the Republican leader.

Bowman said Tuesday that although the U.S. has not released its official data due to the budget impasse, there are already signs of continuing deterioration in the labor market.

"What I would tell you is that we’re continuing to see additional job losses in the economy," she added.

"We’re also seeing a softening in consumer spending."

Although the unemployment rate remains historically low, it is slowly rising.

"It’s hard for college graduates to get jobs, and people who are looking for jobs are really struggling," she opined.