According to Chicago Federal Reserve President Austin Goolsbee, there is still a possibility of achieving a soft landing as the central bank aims to address inflation without causing major harm to the economy.Thank you for reading this post, don't forget to subscribe!
“Due to the peculiarities of this moment, it is likely that the golden path is achievable…that we can bring down inflation without a recession,” Goolsbee stated on CNBC’s “Squawk Box.” “If that occurs…it would be a continuation of what we have already witnessed this year, which is a slight increase in unemployment and a modest decline in inflation…that is our objective.”
Last week, the Fed maintained steady interest rates, marking the second consecutive meeting in which the Federal Open Market Committee has refrained from implementing rate hikes after 11 increases.
The personal consumption expenditure price index, which measures core inflation, currently stands at an annual rate of 3.7%, significantly surpassing the Fed’s annual target of 2%. Goolsby emphasized that the decrease in price pressures thus far has already been a major accomplishment.
“In 1982, we experienced the steepest decline in the inflation rate,” Goolsby explained. “We will need to wait and see what happens in the upcoming months. We may match the fastest rate of inflation decline in the past century. Therefore, we are making progress in terms of reducing the inflation rate.”
Despite the stringent measures implemented over the past year and a half, the economy remains in good condition. In the third quarter, the gross domestic product grew at an annual rate of 4.9%, surpassing inflated expectations.
Goolsby emphasized that achieving such a “golden path” against a historical surge in inflation will be challenging.
He stated, “Unusually, the inflation rate has never declined to the extent that we are bringing it down without a significant recession. This is something that has almost never occurred.” “Let us strive to manage this situation successfully.”
The remarks from the Fed chairman echo those of Chairman Jerome Powell from last week, indicating that the central bank will rely on data in making decisions moving forward.
Powell had previously stated that although the central bank has not yet reached a decision for the December meeting, “the committee will take appropriate action at that time.”