MNI BRIEF: Goolsbee Warns Fed Staying Too Tight, Too Long
MNI (WASHINGTON) - Federal Reserve Bank of Chicago President Austan Goolsbee warned Thursday central bank policymakers may be keeping interest rates too high for too long, noting the Fed may need to respond to any weakness in the U.S. economy threatening the Fed's maximum employment and stable prices goals.
"I have concerns. Look, we set the interest rate high, we're tight, and we set this rate a year ago, and conditions were very different a year ago than they are today," Goolsbee said in an interview with Fox News. "You've seen a lot more cooling of the job market, and you've seen a lot more improvement on the inflation side. So we need to be thoughtful, because if we're too tight for too long, we're going to have to come to grips with what that's going to do to the real side of the economy."
Goolsbee said the unexpected jump in the U.S. unemployment rate to 4.3% last week was "disappointing" but noted that while the job market is cooling, it is still uncertain whether conditions will continue to deteriorate much more. "We are in the business of maximizing employment and stabilizing prices, and if those start to go wrong, then our job is to try to address that on the real side of the economy," Goolsbee said. (See MNI INTERVIEW: Fed To Cut Gradually If Growth Solid-Giannoni)