Goolsbee - Makes Sense To Wait And Get More Clarity

Chicago Fed’s Goolsbee (’25 voter) said in prepared remarks that it makes sense to wait and get more clarify before moving rates, as the inflation progress has stalled so far in 2024 in a move that can’t be dismissed. The hawkish comments by Goolsbee's standards, have limited impact after hawkish commentary from other FOMC members already this week.

Highlights from the SABEW Q&A:

• I think we have to recalibrate and wait and see. It doesn’t look like [disinflation] will be as rapid as the previous six or seven months. I’m one of the proud data dogs. With these numbers we need to do more sniffing.
• On restrictiveness: looking at the real fed funds rate, that’s historically quite high, as high as it’s been in some decades. If you hold that at that level of restrictiveness for too long, you will definitely have to think about the employment side of the mandate too. All of that hinges on inflation keep coming down.
• Q: Let’s say that progress on housing continues at a much slower rate, in that situation do you just accept core PCE running at 2.75%, do you accept that and keep policy tight?
• No, we will get inflation back to 2%. If housing is going to be 5% or whatever it is, then other inflation has to be lower. We need to get it back to 2% over a reasonable period of time.
• Under what scenario would you think about raising rates?
• Don’t think that anything is ever not on the table. The job of central banker is to be paranoid about everything. We’re going to get inflation back to 2%. We’re just trying to figure out what is necessary and how restrictive we need to be. If you hold rates and see inflation coming down, you are tightening, and vice versa if you see inflation rising.