Chicago Fed President Austan Goolsby spoke candidly about the impact of the Federal Reserve's actions on the Craman Countdown.
Chicago Fed President Austan Goolsby He said on Monday that the Fed's rate-cutting campaign still has a ways to go before it reaches “neutral” rates, and that the central bank will need to continue cutting rates to reach neutral rates unless there are signs that the economy is overheating. Ta.
Mr. Goolsby, who will be sworn in as a voting member of the Federal Open Market Committee (FOMC), which sets monetary policy, in January, said this in an appearance on Fox Business Network.Claman countdown” Policymakers said they would likely continue lowering rates until they hit a neutral rate, but that path could slow if the economy accelerates.
“If you look at the big-picture plot, unless there are any signs that the economy is actually overheating, interest rates will be quite a long way from reaching something like neutrality,” Goolsby told host Liz Claman on Monday's show. I can still safely say that we will keep our distance.” Interview.
“If inflation is moving towards the 2% target, unemployment is rising, but we are not reaching a situation like sustainable full employment, if the temperature is around 2%; “You'd better be careful about pouring cold water into the bathtub.'' I want you,'' Goldsby said.
Fed Chairman Jerome Powell says central bank is in no hurry to reach 'neutral interest rate'
Chicago Fed President Austan Goolsby said interest rates are “well above” the neutral rate and could be lowered further depending on economic conditions. (Vincent Alban/Bloomberg via Getty Images/Getty Images)
His remarks follow Jerome Powell Fed Chairman He said earlier this month that the central bank was in no hurry to cut interest rates to reach a neutral rate, which he said was “a level of interest rates that neither boosts and supports the economy, nor drags it down, and is a level of interest that is not going to push the economy up and support it, but will also push the economy down. “There is a possibility that this will result in a restrictive policy.” . ”
Powell added that while there was no “theoretical or empirical way” to confidently estimate the neutral interest rate, he “argued we should tread carefully.” Goolsby echoed the chairman's sentiments, saying the neutral interest rate is known “by how it works in the economy.”
Mr. Goolsby said that all projections of future interest rate ranges in FOMC policy makers' “dot plot” indicate that rates are likely to fall over the next year, until they reach a settling point, perhaps near the neutral rate. He pointed out that this suggests that.
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Chicago Fed President Austan Goolsby said the Fed could continue cutting interest rates unless there is convincing evidence that the economy is overheating and inflation is accelerating again. (Photo by Chip Somodevilla/Getty Images/Getty Images)
“Whether you're on the high or low side of the settling point, almost everyone agrees that we're well below current levels. So where is the disagreement about what's going to settle down? “The closer we get to that point, I said, 'I see it makes perfect sense to start slowing the pace of rate cuts,'” Goolsby said.
“Unless there is some convincing evidence of overheating, we will not continue lowering the federal funds rate because everyone agrees it is well below today's levels, which means lowering the federal funds rate,” he said. I think there is no basis for this,” he added. “So I feel like I'm still leaning towards this trajectory, that direction, until we start to get to the range that people consider calm.”
Goolsby also cautioned Fed watchers not to overextend individuals. inflation report, This is because this is a “noisy” data series, and month-to-month movements do not necessarily indicate a long-term trend in the pace of price growth.
Federal Reserve Chairman Jerome Powell attends a press conference on May 1, 2024 in Washington, DC. (Photo credit: Liu Jie/Xinhua News Agency, Getty Images/Getty Images)
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The Commerce Department is expected to release data for October, the Fed's recommended measure of inflation. Personal consumption expenditure (PCE) indexon wednesday.
September PCE measurements It was 2.1% compared to the previous year, and 0.2% on a monthly basis.
