In a recent interview with Bloomberg TV, Fed member Austan Goolsbee reiterated that a measured approach to economic data is important and said the central bank is committed to its dual mandate of promoting maximum employment and stable prices.
“I have been saying for a long time that we do not want to overreact to one-month data,” said Goolsbee, adding that monetary policy should be stable. Stating that the role of the central bank is to “act in a stable manner”, Goolsbee suggested that sudden or harsh measures could destabilize the economy.
Goolsbee also pointed out the risks of continuing restrictive monetary policies for a long time, especially in terms of employment. “If we stay restrictive for too long, we will have to consider the employment imperative,” Goolsbee said, adding that the unemployment rate rising above 4.1% would require a response from the FED.
Underlining the positive trends, Goolsbee noted that the FED has witnessed the desired improvements in inflation. “The outline of the data does not change depending on one-month figures,” said Goolsbee, adding that he understands the tendency of markets to jump to conclusions. “I completely understand why markets would want to conclude a trend,” Goolsbee added, but explained that economic conditions will ultimately determine the size and timing of any rate cuts.
Looking ahead, Goolsbee stated that the FED will collect important information before its next meeting, drawing attention to the downward trend in inflation and the cooling of the labor market. Goolsbee acknowledged that it is well known among Fed policymakers that multiple rate cuts are expected over the next year. “When circumstances warrant a rate cut, there is often not a single rate cut,” he observed.
Despite these positive signals, Goolsbee pointed out that uncertainties and challenges remain, warning that the economy still faces “crosscurrents”.
*This is not investment advice.