Current:Home > ContactTop official says Federal Reserve can’t risk being too late with rate cuts -BrightFuture Investments
Top official says Federal Reserve can’t risk being too late with rate cuts
View
Date:2025-04-12 18:57:08
WASHINGTON (AP) — A top Federal Reserve official warned Wednesday that the Fed needs to cut its key interest rate before the job market weakened further or it would risk moving too late and potentially imperil the economy.
In an interview with The Associated Press, Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said that because the Fed’s rate decisions typically affect the economy only after an extended time lag, it must avoid waiting too long before reducing rates.
With inflation steadily easing, the Fed is widely expected to start cutting its benchmark rate next month from a 23-year high. Goolsbee declined to say how large a rate cut he would favor. Most economists envision a modest quarter-point cut next month, with similar rate cuts to follow in November and December. The Fed’s key rate affects many consumer and business loan rates.
“There is a danger when central banks fall behind events on the ground,” Goolsbee said. “It’s important that we not assume that if the labor market were to deteriorate past normal, that we could react and fix that, once it’s already broken.”
Goolsbee spoke with the AP just hours after the government reported that consumer prices eased again last month, with yearly inflation falling to 2.9%, the lowest level in more than three years. That is still modestly above the Fed’s 2% inflation target but much lower than the 9.1% peak it reached two years ago.
Goolsbee emphasized that Congress has given the Fed a dual mandate: To keep prices stable and to seek maximum employment. After two years of focusing exclusively on inflation, Goolsbee said, Fed officials now should pay more attention to the job market, which he said is showing worrying signs of cooling. Chair Jerome Powell has made similar comments in recent months.
“The law gives us two things that we’re supposed to be watching, and one of those things has come way down, and it looks very much like what we said we’re targeting,” Goolsbee said, referring to inflation. “And the other is slowly getting worse, and we want it to stabilize.”
Goolsbee’s urgency regarding rate cuts stands in contrast to some of the 18 other officials who participate in the Fed’s policy decisions. On Saturday, Michelle Bowman, who serves on the Fed’s Board of Governors, sounded more circumspect. She said that if inflation continued to fall, it would “become appropriate to gradually lower” rates.
veryGood! (41625)
Related
- Meet the volunteers risking their lives to deliver Christmas gifts to children in Haiti
- Environmentalists Rattled by Radioactive Risks of Toxic Coal Ash
- Jessica Biel says she loves to eat in the shower: 'I find it deeply satisfying'
- Bill to allow “human composting” wins overwhelming approval in Delaware House
- McConnell absent from Senate on Thursday as he recovers from fall in Capitol
- Oregon jury awards $85 million to 9 victims of deadly 2020 wildfires
- Pro Volleyball Federation launches with first match in Omaha: How to watch, what are teams
- Appeals court declines to reconsider dispute over Trump gag order, teeing up potential Supreme Court fight
- Global Warming Set the Stage for Los Angeles Fires
- Daniel Will: How the Business Wealth Club Selects Investment Platforms
Ranking
- Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
- German train drivers go on strike for 6 days, bringing railway traffic to a near-standstill - again
- Daniel Will: AI Wealth Club's Explanation on Cryptocurrencies.
- Daniel Will: Exploring Warren Buffett's Value Investing Philosophy
- Trump suggestion that Egypt, Jordan absorb Palestinians from Gaza draws rejections, confusion
- Federal prosecutors charge 40 people after four-year probe of drug trafficking in Mississippi
- Small plane crashes in Florida Everglades, killing 2 men, authorities say
- Georgia House speaker proposes additional child income-tax deduction atop other tax cuts
Recommendation
'Kraven the Hunter' spoilers! Let's dig into that twisty ending, supervillain reveal
Farmers block roads across France to protest low wages and countless regulations
Customers eligible for Chick-fil-A's $4.4 million lawsuit settlement are almost out of time
Meghan Markle and Prince Harry Get Royal Welcome During Rare Red Carpet Date Night in Jamaica
Paula Abdul settles lawsuit with former 'So You Think You Can Dance' co
2024 tax refunds could be larger than last year due to new IRS brackets. Here's what to expect.
Attorney: KC man had 'no knowledge' 3 friends were dead in his backyard after Chiefs game
Daniel Will: How Does Stock Split Work