By Ann Saphir
(Reuters) – Chicago Federal Reserve Bank President Austan Goolsbee on Thursday repeated his view that getting the economy on the “golden path” — where inflation falls but recession is avoided – is possible, but not a guarantee.
“The overall level of inflation is still above where we want to be,” Goolsbee said in an interview on Marketplace Radio, noting he wants to see more slowing in goods and housing inflation. Still, he said, “There’s a growing confidence that we can pull it off. The only thing I want to caution you is, that’s not a guarantee.”
Fed policymakers are widely expected to leave its target policy rate in its current range of 5.25%-5.50% when they meet in about two weeks. They are also expected to signal one more rate hike is possible before the year end to fight inflation.
So far, Goolsbee said, monetary policy is working; inflation by the Fed’s preferred measure, the personal consumption expenditures price index, rose 3.3% in July, more than half way to the Fed’s 2% goal from the 7% peak last summer.
Researchers at the Chicago Fed recently published an analysis suggesting the 5.25 percentage points of rate hikes the Fed has delivered since March 2022 “is sufficient to bring inflation back near the Fed’s target by the middle of 2024 while avoiding a recession.”
“They are great economists,” Goolsbee said. “We are very rapidly approaching the time when our argument is not going to be about how high should the rates go; it’s going to be an argument about how long do we need to keep the rates at this position.”
Fed policymakers will publish fresh forecasts for that, as well as for inflation, unemployment and economic growth, at the end of their Sept 19-20 meeting.
(Reporting by Ann Saphir; Editing by Leslie Adler and David Gregorio)