Chip Somodevilla
Chicago Federal Reserve President Austan Goolsbee at a WSJ event on Wednesday said last week’s decision by the central bank to hold interest rates steady was a close but appropriate call, as policymakers need to see whether enough has been done to combat inflation.
Earlier, Fed chair Jerome Powell in published opening remarks to his testimony to Congress reiterated that the monetary policy committee thought it “prudent” to maintain rates so as to allow officials time to evaluate further economic data.
Goolsbee, who is a Federal Open Market Committee member, was speaking at WSJ’s Global Food Forum event. He likened the Fed’s rate decision to a “reconnaissance mission” which will let policymakers assess the implications of what has been a highly aggressive policy-tightening cycle.
“For me it still was a close call,” Goolsbee said. “We’re in this weird foggy environment where it’s hard to figure out where the road is and I felt like a reconnaissance mission is the perfectly appropriate thing to do after you’ve had ten raises in a row, among the fastest increases in interest rates in recent memory – really in decades.”
Powell in his testimony earlier also stressed that the central bank’s 2% inflation target remained the main goal.
“The Fed’s job by law is to maximize employment and stabilize prices and we’ve done pretty well on the employment side,” Goolsbee said, adding that the Fed “missed on inflation as everyone else did” and that it has proven far more persistent than expected.
The Chicago Fed President added that over the next coming months, the central bank will receive several markers that will paint a clearer picture on whether the Fed has got a “handle on inflation.”
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