Chicago Fed Chairman Austan Goolsbee said Tuesday that the Fed should be cautious about raising interest rates in the face of recent banking stress, adding that a pullback in bank loans would help quell inflation and leave less room for monetary policy.
Chicago Fed President Goolsbee Makes An Anti-Interest Statement
"At these times of financial stress, the right monetary approach requires prudence and patience to assess the potential impact of financial stress on the real economy," said Goolsbee, who made his first comprehensive comment on the policy outlook since he took over the Chicago Fed in January.
In his speech for an event at the Economic Club of Chicago, Goolsbee said that inflation, which is more than double its 2% target by the Fed's preferred measure, has not fallen enough even after the US central bank's sharp rate hikes last year.
The Fed official said the job growth was "remarkable", adding that even more aggressive policy tightening might be deemed necessary based on these data alone.
"Given how much uncertainty there is about where these financial woes are headed, I think we need to be cautious," Goolsbee said.
Goolsbee said the following about the Fed's interest rate decisions in the coming period:
“We need to collect more data and be careful about raising rates too aggressively until we see how well the factors that slow economic growth work for us to keep inflation down.”
As we reported as Bitcoinsistemi.com, on March 22, the FED increased the benchmark interest rate by the last quarter point to the range of 4.75%-5.00%.
Goolsbee's call for patience was a little more dovish than some of his colleagues who have spoken since March 22, signaling that most policy makers expected another rate hike would be enough to bail out high inflation.
But Goolsbee also made it clear that he is not advocating for the kind of rate cuts the Fed has taken in response to past financial stressors, the kind that markets are currently pricing in for the second half of this year.
*Not investment advice.
