Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank needed to pause interest-rate increases to be able to better assess conflicting economic data.
(Bloomberg) — Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank needed to pause interest-rate increases to be able to better assess conflicting economic data.
“I think of it as a reconnaissance mission, pausing now to go scope it out before charging up the hill another time,” Goolsbee said Friday in an interview on National Public Radio.
Policymakers paused a series of hikes this week for the first time in 10 meetings, leaving interest rates unchanged in a range of 5% to 5.25% while they analyze how their actions so far are impacting the economy. At the same time, they signaled that two more rate increases may be appropriate this year.
The Fed had hiked rates aggressively over the last 15 months as it tried to cool inflation that last year reached a four-decade high.
Goolsbee said disparate data points, such as a continued fast pace of hiring even as total hours worked declines, make it difficult to decipher the economy. He also said one good data point, like a slower inflation reading in May, can’t be the sole driver of policy.
“The question really is: Are we on that golden path or not?” he said. “Whether goods prices start coming down as we expected they were about to, and whether housing prices, the inflation rate starts coming down as we’ve kind of been expecting — those are ones are critical.”
Goolsbee has been one of the Fed’s more dovish members, expressing concern about how bank turmoil following the collapse of four US lenders this year may affect the availability of credit, and how that could add to the tightening of financial conditions already underway amid the central bank’s rate increases.
Goolsbee said he’s looking for stronger trends in the data in order to see “through the waggles,” but that he’s optimistic.
“We’re going to be able to do it. The North Star that the Fed is trying to do is get the inflation rate down without starting a big recession and that will be a triumph,” he said.
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