The president of the Chicago Federal Reserve, Austan Goolsbee, said on Friday that he still saw interest rate reductions in the cards, although the risks increase to this perspective.
Speaking two days after him and his colleagues voted to keep the short -term rates stableGoolsbee told CNBC that he heard more concerns of companies in his region on the impact of prices and their potential to increase prices and slow growth.
“When you have a lot of uncertainty, I think you have to wait to see that some of these things are written on the side of politics,” said the central banker during “Squawk box“Interview.” I am talking to business people and civic leaders in all this region, and there has been a decided turn in these conversations in the past six weeks, anxiety, break, waiting for fixed assets, CAPEX, etc., until they include prices, other tax policies. “”
Nevertheless, Goolsbee said that he is still expecting future rate reductions even if the Fed adopts an expected approach for the moment while the problems take place on the president Donald TrumpTariff plans as well as deregulation and tax reductions.
“If we can continue to progress on long-term inflation, I think that the rates of 12 to 18 months will be lower than those of their situation today,” he said.
Speaking separately Friday morning, the president of the New York Fed, John Williams, also noted the high level of uncertainty concerning decision -making and economic trends, in particular inflation.
“Recent data – hard and soft – send mixed signals. Measures of policies' uncertainty have increased sharply in recent months,” Williams said in a speech in Nassau, the Bahamas.
The two decision -makers voted with the rest of the Federal Market Open Market Committee to hold the FED fund rate in the short term in a beach between 4.25% and 4.5%. In its post-reunion declaration, the FOMC noted that “uncertainty around economic prospects has increased” and chair Jerome Powell used the term “uncertainty” 10 times at its press conference after the meeting.
A question that has arisen in recent days has been whether the The US economy is heading for stagflationor slow growth and increased inflation.
“Prices, increase prices and reduce production. It is therefore a stagflationist impulse, which is different from saying that it is stagflation,” said Goolsbee. “The unemployment rate is barely 4% and inflation is in the 2S. Thus, the hard data we start are not the stagflation of the 1970s. It's just the … The uncomfortable environment is when it moves in the wrong direction.”
Participants in the FOMC meeting kept their projections for two rate drops until 2025. The markets, however, think that the Fed will be more aggressive, the price of the equivalent of three -quarter percentage points reductions CME Group Data.
