MNI BRIEF: Fed Debate Now More Around High For Long - Goolsbee

Chicago Federal Reserve President Austan Goolsbee said Friday the economy's recent path suggests officials are more likely to consider holding peak interest rates for longer rather than pushing ahead with further increases.

“It does feel like we’re in a period where if conditions keep going like what we’ve seen the last couple of months, our argument is going to revolve around well how long should we keep rates at the levels they are, rather than how much higher should the rates go,” he said in a CNBC interview from the Fed's Jackson Hole conference.

The economy still has a chance for an often elusive "golden path" of restoring price stability without a "big recession," said Goolsbee, in line with some of past comments. He said inflation remains too high and it would have been premature for Chair Jerome Powell to declare victory in his speech earlier Friday. (See: MNI: Powell-Fed Will Hike More If Needed, To Stay Restrictive and MNI INTERVIEW2:Fed’s Harker-Soft Landing In Sight, Jobs Weaker)

Goolsbee sounded some hawkish notes, pointing to signs GDP growth could be accelerating and to resilient consumer demand including pent-up demand for cars. Asked about a rate cut next year he said “there are scenarios in which I feel like it will be obvious that the Fed needs to be more aggressive, there are scenarios in which it’s clear the Fed needs to be less aggressive.” He also shot down the idea the Fed could abandon its 2% inflation target to avoid pain elsewhere in the economy.