Central Indiana Corporate Partnership Moderated Q&A
Federal Reserve Bank of Chicago President Austan Goolsbee shared his views on the U.S. economy and monetary policy during a moderated Q&A hosted by the Central Indiana Corporate Partnership on November 21. Jamie Merisotis, CEO of the Lumina Foundation and a CICP board member, spoke with President Goolsbee at the event, held at Ivy Tech Community College in Indianapolis, IN.
Below are planned talking points the Chicago Fed president prepared for the conversation and shared with reporters in advance.
The views expressed below are those of President Goolsbee and are not necessarily those of the Federal Reserve System or the Federal Open Market Committee.
I always say that the hardest thing a central bank has to do is get the timing right at moments of transition in the economy. That’s even more true when times are unusual and past experience is only vaguely helpful. So, it’s easy to understand why the end of this year and the start of 2025 represent a critical moment for the Fed.
At times like this, it’s important not to fall for “this-month-itis” and over-index on the latest data point. We need to take a longer-arc view to get a better sense of what’s going on.
Take job growth over the last three months: It disappointed in August, boomed in September, and then flopped in October, as it was dragged down by the impacts of a strike and two hurricanes. If you picked one specific moment, you might conclude the economy was overheating or that it was falling apart. That’s why it’s important to look at a range of data over longer periods of time to see the real through line here.
My view is that the long arc over the last year and a half shows inflation is way down and on its way to 2 percent. Labor markets have cooled to something close to stable full employment. Things are getting close to where we want to settle on both counts. It follows that we will probably need to move rates to where we think they should settle, too. We don’t need to get to that place immediately, but if we look out over the next year or so, it feels to me like rates will end up a fair bit lower than where they are today.
That’s my view of the general path ahead. But when there’s uncertainty or disagreement about where rates will eventually settle, it may make sense to slow the pace of rate cuts as we get close.
Of course, conditions can change the outlook or the risks. But conditions change all the time. It’s why the FOMC meets every six weeks to revisit and recalibrate.
Congress gave the Federal Reserve a straightforward job: Conduct monetary policy in a way that maximizes employment and stabilizes prices for the American people. If the government enacts laws or other branches of government make decisions that affect employment or prices, we will think through the impacts on the economy just like we think through everything else that affects our mandate. We don’t play guessing games. We just do our job. It’s the Fed way.
