2023-07-31 16:22:31
(Washington) An official of the US Federal Reserve (Fed) said Monday that a further pause in rate hikes at the next meeting in September is possible, if the country’s economy continues to evolve positively.
If economic data to be released by the September 19-20 meeting shows that inflation continues to ease and economic activity and employment remain strong, “I think everyone will be comfortable to stay where we are,” Chicago Fed President Austan Goolsbee said in an interview with Yahoo Finance.
The Fed on Wednesday raised rates for the 11e times since March 2022, following a break at its previous meeting in mid-June. Its main key rate is now in a range of 5.25 to 5.50%.
Austan Goolsbee, who in 2023 has rotating voting rights within the Monetary Policy Committee (FOMC), the Fed’s decision-making body, however warned that no decision is certain at this stage: “Nothing is excluded, nothing is assured. Don’t tie our hands.”
“I haven’t decided yet what should happen in September,” he added.
Austan Goolsbee praised the fact that the Fed has so far succeeded in bringing down inflation without creating significant damage to the economy.
“Our goal is to stay on what I call the golden path, which is to reduce inflation without causing a major recession. And that would be a triumph for the Fed […]. We have never succeeded in bringing down inflation as much as we have done so far without a recession,” he explained.
According to him, achieving this goal “is certainly a possibility at this stage”.
Fed Chairman Jerome Powell kept all options open Wednesday at his press conference following the FOMC meeting.
“It is possible that we will raise rates once more at the September meeting if the data warrants it. […] It is possible that we choose to stay at the same level”, he was content to comment.
But the recession, which seemed inevitable a few months ago, now seems to be avoidable. Fed economists have just removed this risk from their economic forecasts, anticipating however “a significant slowdown in growth”, according to Jerome Powell.
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