Goolsbee: Economy at Full Employment, Fed Sees Lower Rates Ahead if Conditions Hold

Federal Reserve Board of Governors member, Austan Dean Goolsbee, commented US economy, inflation and tariffs impact today. Here is the highlight from his remarks.

Fed Goolsbee

• The inflation rate over the last six months was 1.9%, and it's wrong to say we're not making progress on inflation.

• Current wage growth is consistent with 2% inflation when accounting for productivity.

• The job market seems stable at full employment, and the recent jobs report is not a sign of overheating.

• Interest-sensitive parts of the economy show impact of Fed restraint, though this is offset by factors like business confidence.

• Productivity is very noisy as a data series but very important to watch; will determine if there is overheating or not.

• The rise in long-term rates is not explained by inflation expectations. It would be a concern if long rates started rising on the basis of inflation expectations.

• 12 to 18 months from now, rates would be a fair bit lower if current expectations are met.

• If conditions are stable and there is no uptick in inflation, with full employment, rates should go down.

• The Fed does have to think about issues like tariffs and other nations' responses that impact prices.

• The issue would be determining if tariffs are a one-time shock to prices or a persistent one.

• The current high annual inflation number is largely reflecting the uptick of early last year; wrong to say there has not been recent progress.

• Some component of rise in long rates is from higher than expected growth and expected slower pace of Fed cuts.

EURUSD (M15 interval)

The EUR/USD pair is down 0.3% today, attempting to recover some of its earlier losses following remarks from Federal Reserve official Austan Goolsbee.