Interest rate signal from Fed official

Chicago Fed President Austan Goolsbee said the Fed needs to cut interest rates soon to avoid a major deterioration in the labor market, which has been cooling in recent months. Goolsbee said the slowdown in inflation over the past few months has increased officials’ confidence that inflation is on target. Goolsbee said the labor market is a concern. Goolsbee, who has a vote on this year’s FOMC, said “yes” to the question of whether there is a chance to win the war on inflation without increasing the unemployment rate. Fed Chair Jerome Powell and several other Fed officials have said the bank is making progress toward reaching its 2 percent inflation target. However, officials have not signaled the timing of the rate cut. The Fed is not expected to make an eighth rate cut at its July meeting. Markets expect at least two more cuts by the end of the year, the first in September. Fed Board Member Christopher Waller said in a statement yesterday, “I believe we are getting closer to the time to cut rates, even if we haven’t reached our ultimate goal.” After the slowdown in inflation in the first months of 2024 paused, it continued to move downwards again in recent months. The unemployment rate, which remained low at 4.1 percent, has increased in the last 3 months. The rise in the unemployment rate, which fell to 3.4 percent in the first months of 2023, also increases concerns about recession.