Federal Reserve Bank of Chicago president Austan Goolsbee said Monday that he hasn't made up his mind about whether to raise interest rates or stop hiking at the Fed's next policy meeting in September, emphasizing that "nothing is off the table."
The Fed's goal, he said during an interview on Yahoo! Finance Live (video above), is to "stick on the golden path" and "get inflation down without causing a recession."
"Thus far," he added, "we are on the golden path."
Last week, Fed officials decided to raise interest rates for the eleventh time since March 2022 in what may be the first of two rate hikes that officials have penciled in for the remainder of the year. Wall Street is betting that last week’s rate hike will mark the Fed’s last before holding rates at the current level into the first half of next year.
Read more: What the Fed rate hike means for bank accounts, CDs, loans, and credit cards
When asked whether it’s a possibility to skip raising rates at the Fed's September policy meeting or to stop raising rates if the Fed has enough good inflation data by then, Goolsbee said: "There’s nothing off the table. There’s nothing specifically on the table. … I haven't made up my mind for what should happen in September."
"We're going to get multiple important observations about both inflation and the job market between now and September," he added.
Goolsbee, a Fed regional bank voting member this year, is encouraged by the latest data on inflation.
The Fed’s preferred Personal Consumption Expenditures (PCE) Index clocked in at 4.1% in June, excluding volatile food and energy prices. That’s down from the 4.5% to 4.6% seen for the first half of the year until June. This comes after the Consumer Price Index for June also showed progress on core inflation.
"It was fabulous news to see that inflation is coming down in this way," he said.
Goolsbee says he’s keeping his eye on new monthly readings for core inflation for both goods and services as well as housing. He’s expecting higher rents to start dropping out of inflation readings based on how the inflation indexes are calculated.
"And anything that we're getting in the near term reducing services inflation is in a sense just an added bonus because we have always thought that to be the stickiest part of inflation that we've seen actually some progress on that front was unexpected and a nice bonus," said Goolsbee.
Goolsbee is also encouraged by stable credit conditions. In May, Goolsbee warned on Yahoo Finance that we may be in the early innings of a credit crunch, but now he believes things have calmed down.
"So far that's been the dog that has not been barking," he said.
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