Fed bankers Goolsbee and Schmid commented today on the U.S. economy and Federal Reserve policy. Below are their remarks.
Schmid (Fed)
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A quarter-point rate cut was a reasonable risk-management move.
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Inflation remains too high, while the labor market is still balanced.
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The Fed’s supervisory role over banks is important for the central bank’s broader mission.
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Future monetary policy decisions will be data-dependent.
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Fed policy is currently slightly restrictive — which is the right place to be.
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Inflation is still too high, and the current labor market remains largely in balance.
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Recent data point to rising risks for the labor market.
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A rate cut was appropriate to offset labor market risks.
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The Fed is currently close to fulfilling its mandates, but policy must remain forward-looking.
Goolsbee (Fed)
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I remain broadly optimistic that we are on the “golden path,” with inflation trending lower.
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In the short term, the biggest concern is the risk of persistently higher inflation.
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AI adoption by businesses has not been as large as many assume.
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Historically, short or limited government shutdowns do not have lasting economic effects.
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Some labor market measures are pointing to greater stability.
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The labor market is cooling mildly.
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If government can dictate to the central bank what to do with rates, inflation rises.
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Rates could fall further if stagflation risks fade.
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I see a “strange environment” with risks on both jobs and inflation.
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Rates could come down quite a bit more if inflation heads toward 2%, but I am cautious about front-loading cuts.
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Relying on inflation being transitory makes me uneasy.
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I am somewhat uncomfortable with cutting rates too quickly based solely on slowing job data.
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The labor market seems to be cooling while inflation is rising.
Source: xStation5
