Fed’s Goolsbee: Latest Jobs Report “Superb”; More Rate Cuts Expected

A strong jobs report for September has sparked optimism about the US economy, suggesting it may be nearing full employment with low inflation, according to Austan Goolsbee, President of the Chicago Federal Reserve Bank.

In a recent interview, Goolsbee pointed out that while the jobs report was impressive, various indicators show that the labor market is still experiencing a cooling trend, and there are signs that inflation may fall below the Federal Reserve’s target of 2%.

Goolsbee also noted that the central bank’s policy rate is currently much higher than its eventual settling point and will likely need to be lowered over the next year to year and a half.

This commentary follows the announcement that the US economy added 254,000 jobs in September, a significant increase from the revised figure of 159,000 jobs in August. Economists had predicted a gain of 147,000 jobs.

Additionally, the unemployment rate decreased to 4.1%, contrary to forecasts that anticipated it would remain at August’s rate of 4.2%.

Average hourly wages increased by 0.4% on a monthly basis, surpassing expectations of 0.3%, although it was slightly lower than August’s revised increase of 0.5%.

Analysts have emphasized that the labor market will play a crucial role in determining the pace of any future rate cuts, particularly as inflation shows signs of easing.

Federal Reserve Chair Jerome Powell indicated earlier this week that the bank is likely to favor more traditional quarter-point rate reductions moving forward but emphasized that the future trajectory of rates remains uncertain. He added that the rate-setting committee is not rushing to implement rapid rate cuts despite the significant reduction of 50 basis points during its meeting in mid-September.