Federal Reserve Bank of Chicago President Austan Goolsbee said policymakers are on a “golden path” to ease price growth without triggering a recession in the world’s biggest economy, as data out Friday showed a slowdown in what remains a strong labor market.
“We’re getting to a more sustainable pace, which is what we need to do for inflation,” Goolsbee said of the jobs data in an interview on CNBC Friday. “The Fed’s overriding goal right now is to get inflation down — we’re going to succeed at it. And to do that without a recession would be a triumph, and that’s the golden path — and I feel like we’re on that golden path.”
Goolsbee, who votes on policy decisions this year, stopped short of endorsing a rate hike at the Fed’s meeting in July, saying officials still have a couple more weeks of data to assess before their next gathering.
“I’m still undecided,” the Chicago Fed chief said. “We’re still weeks away,” he said, adding “the main thing that we want to see now is: Are we making progress, especially on goods inflation?”
Goolsbee said the consensus of almost all FOMC participants is for one or two more hikes this year, which he said could come at any of the upcoming meetings in the second half of the year.
“We have to figure out when, but there are some modest increases to come,” he said. “But we’ve done a lot of the lifting and now we’re waiting for the impact.”
Nonfarm payrolls increased 209,000 last month — less than economists expected — and job gains over the prior two months were revised lower, a Bureau of Labor Statistics report showed Friday. The unemployment rate fell to 3.6%. Average hourly earnings rose 4.4% from a year earlier, and the average work week edged up.
Policymakers held interest rates in a range of 5% to 5.25% at their June 13-14 meeting, pausing their rate-hike campaign after 10 consecutive increases over the past 15 months. At the same meeting, officials lifted their projections for how much more tightening may be in the pipeline this year and now expect two further increases.
The Fed is trying to further cool inflation, which has come down from a peak last year but remains far from the central bank’s 2% goal. It’s also allowing time for its aggressive policy to work through the economy. It is also assessing how much recent banking turmoil will impact credit conditions.