Chicago Federal Reserve Bank
President Austan Goolsbee is not there yet on a September rate cut
- Fed’s fall rate-setting meetings will all be live
- Some job market data show it’s solid, some show concerns
- Fed would need to cut rates if labor market is deteriorating; not sure that’s what’s happening
- Need multiple months of favorable inflation reading to get comfort needed to cut rates
- So far have had a couple of months of mild inflation; latest CPI had concerning rise in services inflation
- Uneasy thinking of tariffs as one-and-done inflationary shock, given levies on semiconductors, new tariff announcements
- What underlies economy would naturally lead to lower rates
- Entirely possible to cut in anticipation if you think inflation is on path to 2%, then stop or hike if information contradicts
- Some important data coming in before Fed’s Sept meeting, not implying that I can’t reach a decision by then
Goolsbee tends towards the dovish end of the Federal Open Market Committee (FOMC) spectrum, I’d say out of all of then he is consistently the most dovish, or least hawkish if you prefer. But, he does not yet sound convinced yet on a September interest rate cut.
The September meeting is going to be lit!
