Austan Goolsbee, president of the Chicago Fed commented today Fed interest rates policy and economy, for CNBC. Here are the highlights from his remarks.
Fed's Goolsbee
I do not think rates will go back to where they were before the pandemic. I still feel good about a 12 to 18-month path to the neutral interest rate.
It is possible long rates are rising because growth is expected to be higher, or because markets think the Fed might slow its rate cuts.
The Fed has to figure out why the 10 year is rising, and keep an eye on long rates.
I have seen prior moves up in import prices that were just a bump in the road.
What matters to the Fed is the new months of inflation data that are coming in, the Fed must reach 2%.
Rates are likely to need to fall over the next year. The Fed is not going to move the inflation goalposts.
Core PCE is still too high. Policy has nothing to do with the outcome of the election but the condition of the economy.
If there is disagreement over the neutral rate, it does make sense to start slowing the pace of rate cuts.
As long as inflation continues to come down, rates will be a lot lower than they are now.
It's hard to reconcile recent weak jobs reading given storm impacts.
The basic story of the economy remains falling inflation, and the labor market cooling to full employment
The current Fed policy is still in restrictive posture.
EURUSD erased most of its today gains after US retail sales data and upbeat in NY Fed; now falling to 1.0533.
