Chicago Fed President Austan Goolsbee made several statements regarding interest rate decisions and the future of inflation after the US January inflation data released yesterday. He pointed out that the possibility of inflation being slightly higher for a few more months is consistent with the expectation of a return to the main target of 2 percent.
Speaking at the Council on Foreign Relations in New York, he said that even if inflation remained higher than expected for a few more months, it would not change the overall picture. “There is nothing wrong with some ups and downs,” he said.
He underlined that the incoming data should not lead to the conclusion that there will be no interest rate cut in 2024.
“The Decline in Inflation is Clearly Seen”
He said that he thought the Fed’s benchmark interest rate was too high and that this was dragging down growth, that monetary policy was tight enough, that inflation could fluctuate up and down and that he did not support the idea of waiting until 12-month inflation fell to 2 percent to cut interest rates.
Goolsbee said that it is important not to look at just one data point, but to look at the 3, 6 and 12-month inflation figures to see clearly that inflation is falling.
The US January inflation figures, which were highly anticipated by global markets, were announced yesterday and according to the first inflation report of the year, the annual CPI in the US was realized above the forecasts as 3.1 percent.
This caused the first rate cut in 2024 to be postponed to June or later.
Source: https://www.marketwatch.com
