Fed’s Goolsbee Indicates Support for Rate Cuts Amid Labor Market Warning Signs

Chicago Federal Reserve President Austan Goolsbee voiced his support for potential interest rate cuts, expressing concerns over high rates amidst “warning signs” in the labor market. In a recent interview, Goolsbee stated, “Everything we wanted to happen to get rates down has happened.” He noted that current interest rates are meant to cool an overheating economy but emphasized that “this is not overheating.”

Goolsbee highlighted these “warning signs” following weaker nonfarm payrolls data from July, which reinforces the central bank’s increased focus on employment as part of its dual mandate. As inflation is projected to continue its decline towards 2%, he asserted, “I don’t think inflation will get stuck above 2%.” His remarks followed a speech by Fed Chairman Jerome Powell, who indicated that it may be time for policy adjustments. Powell stated, “The time has come for policy to adjust” during the Kansas City Fed’s annual conference in Jackson Hole, Wyoming.