Fed’s Goolsbee says he’s ‘hopeful’ central bank can get inflation down without causing recession

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The Federal Reserve is trying to getting inflation down significantly without causing a recession, and there is a chance that it might succeed, said Chicago Federal Reserve President Austan Goolsbee on Friday.

Critics often allege that central banks are not able to lower inflation without causing a severe economic downturn, Goolsbee said in an interview on the Fox Business Network.

But this time might be different, he added.

“I am hopeful that we can pull it off because the pandemic was a weird business cycle” where the normal rules didn’t apply, he said.

The labor market can’t stay “too hot” or the Fed will have a hard time getting inflation down, he added.

Goolsbee said he hadn’t decided what policy he would support at the Fed’s next meeting late next month.

Most economists are expecting the Fed to hike its benchmark rate by 25 basis points to 5.25%-5.5% after pausing at the meeting earlier this month.

In comments on the inflation data released earlier Friday, Goolsbee said he didn’t think goods price inflation was coming down as quickly as Fed officials wanted it to.

See: Fed-preferred PCE gauge shows lowest U.S. inflation rate since April 2021

“That’s the thing that everybody should put their eye on in the immediate term,” Goolsbee. The key question is whether good prices are too high because of one-off factors like used-car prices or is it something more persistent, he added.

Stocks
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SPX,
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were higher on Friday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
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slipped to 3.81%.

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