US Fed Dove Goolsbee: "Interest Rates Must Fall Significantly Over 1 Year"

Chicago Fed President
"Inflation Near Target... Must Prevent Further Rise in Unemployment"

Austan Goolsbee, President of the Chicago Federal Reserve Bank, repeatedly emphasized that interest rates need to fall significantly over the next year.

In an interview with Chicago public radio station WBEZ on the 3rd (local time), President Goolsbee stated, "Inflation has declined to a level close to the target, and the unemployment rate has risen, meaning the labor market is basically at the level we want."

He said that the Fed's focus has expanded from inflation to the labor market, and that they want to prevent the current unemployment rate of 4.2% from rising further.

Goolsbee, considered a leading dove (favoring monetary easing) within the Fed, also mentioned the need for significant interest rate cuts last month. At an event on the 23rd of last month, he said, "The current policy rate is several hundred basis points (1bp=0.01 percentage point) above the neutral rate," adding, "There is still a long way to go to lower rates close to neutral over the next 12 months to maintain the current situation." He also believed that unless the Fed significantly lowers rates in the coming months, it will be difficult to maintain the current favorable employment and inflation conditions.

He does not have voting rights at this year's Federal Open Market Committee (FOMC) but will have voting rights starting next year.

Regarding the strike by port workers in the southeastern United States, Goolsbee said, "Retailers and manufacturers have stocked up two weeks' worth of products," adding, "If the strike lasts longer than two weeks, it will begin to impact the economy."