Federal Reserve Board Member Milan: February Non-Farm Payroll Data Strengthens Rate Cut Justification, Oil Price Surge Is a "One-Time Shock" Not Fearful of Inflation

Bloomberg News has learned that Federal Reserve Board member Michelle Bowman said on Friday that the weak February non-farm employment report further strengthens the case for the central bank to cut interest rates further. Regarding the Labor Department’s report on Friday that U.S. non-farm payrolls decreased by 92,000 in February, Bowman stated in an interview that the Fed should focus more on supporting the labor market rather than worrying about inflation.

She said, “I don’t think we have an inflation problem. I think the labor market needs more accommodative monetary policy. Also, I believe adopting a slightly tightening stance rather than a neutral stance is not appropriate. I think being close to neutral is the right approach.”

Currently, the Fed’s target range for the key interest rate is 3.5% to 3.75%. The Fed has already cut rates three times by 25 basis points each in the second half of 2025. If Bowman’s view is realized—that interest rates will stay near neutral—she believes the neutral level is about one percentage point below the current level. At the December meeting, Fed officials consensus was that the neutral level—neither restraining nor stimulating the economy—is about 3.1%, implying there could still be two more rate cuts.

Bowman has consistently believed that the high inflation data depends more on how the U.S. Commerce Department and Labor Department measure inflation rather than true underlying pressures.

One factor she mentioned is investment management fees, which have increased along with the overall rise in the stock market. Since these fees are usually charged as a percentage of assets, when the market rises, the dollar value of these fees increases even if the actual fee rate remains unchanged.

She added that recent spikes in oil prices and the associated rise in gas station costs related to the Iran conflict are not concerning. She said, “Typically, the Fed wouldn’t react so strongly to rising oil prices. Oil price increases can push up overall inflation, but this is often a one-time shock. Core inflation (excluding energy prices) is a better predictor of medium-term inflation trends than overall inflation.”

Since President Trump nominated Bowman to the Federal Open Market Committee in September last year, she has voted against the majority at every FOMC meeting she has attended. Regarding the three rate cuts, she prefers a larger cut of 50 basis points rather than the 25 basis points approved by the committee. In January, when the FOMC voted not to cut rates, Bowman expressed her desire for a 25 basis point cut.

When asked if she would vote against again, she said, “I hope not, but it depends on my colleagues. I hope we vote to cut rates.”

Bowman was appointed to serve the remainder of the term of Adriana Kugler, who resigned in August 2025. The term expired in January this year, but Bowman continued to serve until her successor was approved. President Trump nominated Kevin Waugh to be Fed Chair, a position that will ultimately succeed current Chair Jerome Powell, whose term ends in May.

She said, “I will attend the meeting in a few weeks, and then I will see how it goes.”