01:38 PM EDT, 09/26/2025 (MT Newswires) -- Federal Reserve Vice Chair for Supervision Michelle Bowman said recent employment data suggest that the Federal Open Market Committee may already be late in reducing interest rates and might need to act more aggressively.

"The recent data, including the estimated payroll employment benchmark revisions, show that we are at serious risk of already being behind the curve in addressing deteriorating labor market conditions," Bowman said Friday in prepared remarks to the Forecasters Club of New York. "Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward."

Bowman acknowledged that inflation remains above the FOMC's 2% target but argued that it is now appropriate to focus on employment, the more fragile side of the Fed's dual mandate.

"This shift is appropriate now because forecasters widely expect inflation to significantly decline next year, and as further deterioration in labor market conditions would likely lead to more persistent damage to the employment side of the mandate, that would be difficult to address with our tools," Bowman said.

Bowman suggested that tariffs will only have a one-time effect on inflation and that price pressures will dissipate afterward, whereas monetary policy operates with a lag. As a result, the FOMC should be focused on longer-term forecasts rather than backward-looking data, she said.

"We should consider shifting our focus from overweighting the latest data points to a proactive forward-looking approach and making a forecast that reflects how the economy is likely to evolve going forward," Bowman said. "Because policy actions take time to flow through to, or have their full effect on, the economy, labor markets, and inflation, it is important that we are making predictions about where the economy is headed and to act on those forecasts in real time."