Fed's Goolsbee Envisions a Goldilocks U.S. Economy and Anticipates Future Rate Cuts
Goldilocks U.S. Economy and Rate Cuts Ahead
Federal Reserve Bank of Chicago President Austan Goolsbee sees a Goldilocks U.S. economy, appreciating inflation nearing a 2% annual rate, full employment, and GDP growth around 3%. Following the strong September jobs data, Goolsbee stated, “You really couldn’t ask for a better report.” He noted significant optimism stemming from stabilizing factors, like the recent port strike resolution.
Future Rate Expectations
While he refrained from commenting on the Federal Open Market Committee's upcoming November meeting, Goolsbee expects interest rates to decline in the upcoming year, seeking a so-called neutral interest rate that balances economic stimulation.
Understanding the Neutral Rate
Analysts suggest the post-pandemic neutral rate could reside in the high 2% to low 3% range, compared to the current federal-funds rate of 4.75% to 5%. Goolsbee commented on productivity growth's impact on determining the neutral rate, indicating that stronger growth signals a potential increase in this benchmark.
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