Federal Reserve Governor Michelle Bowman on Thursday said she supported last month's interest-rate cut as the "final step" in the U.S. central bank's monetary policy recalibration, with rising inflation risks dictating a cautious approach ahead.

Despite the progress that has been made, there are "upside risks to inflation," Bowman added. The Fed's preferred inflation gauge showed a rate of 2.4% in November but was at 2.8% when excluding food and energy, a core measure that officials see as a better long-run indicator.

Bowman, a permanent voter on the FOMC, underscored her preference for a gradual approach to policy adjustments. She pointed to rising Treasury yields and stock market gains as evidence that interest rates are effectively restraining economic activity and curbing inflation.

The US Federal Reserve should proceed cautiously before supporting any future rate cuts, a senior bank official said Thursday, adding that she saw December's rate cut as a final step for now. "I supported the December policy action because,

The U.S. job market again defied an anticipated slowdown, with firms adding more than a quarter of a million jobs in the last full month of Joe Biden's presidency and leaving Federal Reserve policymakers to puzzle over the need for more interest rate cuts in a strong economy.

The latest snapshot of the US labor market affirmed what Federal Reserve officials have made clear in recent days: Interest-rate cuts are on hold for the foreseeable future.

Federal Reserve policymakers got fresh reasons to hold short-term borrowing costs steady after government data signaled renewed strength in the U.S. job market, with traders now betting the U.S. central bank will wait until June to cut interest rates again and end its rate-cutting cycle there.

St. Louis Fed President Alberto Musalem suggests greater caution is warranted on reducing interest rates.