Fed's Goolsbee Supports Additional Rate Hikes to Tackle Inflation

Fed's Goolsbee supports rate hikes to tackle inflation and maintain economic stability. Markets anticipate a rate hike at the next meeting.

Jul 7, 2023 - 12:33
Jul 7, 2023 - 12:35
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Fed's Goolsbee Supports Additional Rate Hikes to Tackle Inflation
Fed's Goolsbee Supports Additional Rate Hikes to Tackle Inflation

Austan Goolsbee, President of the Chicago Federal Reserve Bank, expressed his agreement with fellow central bankers that a few more rate hikes are necessary to address the issue of high inflation. Goolsbee stated that if these rate increases were part of the "golden path," they would successfully bring inflation down to the desired 2% level without triggering a recession.

While Goolsbee previously seemed skeptical about the need for additional rate hikes, he now acknowledges the importance of this strategy. The majority of policymakers expect at least two more rate hikes by the end of the year, given the persistently high inflation levels.

Although the June jobs report indicated a slowdown in hiring, Goolsbee believes the labor market is cooling down. He noted that the full impact of the Fed's rate hikes since last March is yet to be seen. However, Goolsbee emphasized the necessity of reducing inflation, which remains a top priority for the Fed.

Financial markets are already factoring in a rate hike at the upcoming meeting. However, Goolsbee has yet to make a final decision, as he awaits key data on June inflation. Unlike some of his colleagues, Goolsbee focuses on goods prices rather than services inflation in assessing the path of inflation.

To determine whether the "golden path" remains intact, Goolsbee suggests monitoring the goods inflation number closely.

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