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Key Takeaways
- Chicago Fed President Austan Goolsbee said that the Federal Reserve would act if economic conditions deteriorate, telling CNBC that “we’re going to fix it.”
- Goolsbee sidestepped questions on whether the Federal Reserve would schedule an “emergency meeting” to lower interest rates, or on whether eventual rate cuts would be steeper-than-expected.
- The economy is still showing signs of strength, but is not “overheating,” Goolsbee said.
Chicago Fed President Austan Goolsbee told CNBC Monday that the Federal Reserve would respond if economic or financial conditions deteriorate.
Goolsbee wouldn’t comment on whether the Fed might convene an emergency meeting of its policy-setting committee or implement steeper-than-expected interest rate cuts when it meets next in September. However, he indicated that the Fed is prepared to act as it focuses on promoting maximum employment, price stability and financial stability.
“We’re forward-looking about it, and so if the conditions collectively start coming in like that on the through line, there’s deterioration on any of those parts, we’re going to fix it,” Goolsbee said during the interview on CNBC‘s ‘Squawk Box.’
Goolsbee’s comments come after the Federal Reserve left interest rates at their current decades-high levels when it met last week, even as some analysts have argued that the central bank needed to move ahead with an interest rate cut at that meeting to counter a job market that was showing some softness.
The Fed is next scheduled to meet on Sept. 17-18, but some are asking if the Fed should move more quickly and set an emergency meeting ahead of then, while some investors are pricing in steeper rate cuts from the central bank.
Interest Rates at ‘Peak’ of Restrictiveness
Goolsbee argued that there was still some strength in the economy, pointing to stronger-than-expected second quarter Gross Domestic Product (GDP) growth, despite some softness in the labor market.
“The jobs number came in weaker than expected, but not looking like a recession, so you want to be forward looking to where the economy is heading,” he said.
However, he said that interest rates are high enough for the current levels of economic growth, saying that rates were at “peak” of their restrictiveness.
“You only want to be that restrictive if you think there is fear of overheating,” Goolsbee said. “These data to me do not look like overheating.”