Chicago Federal Reserve President Austan Goolsbee suggested a soft landing as the central bank confronts inflation without causing significant harm to the economy. According to Goolsbee, achieving a “golden path” where inflation decreases without triggering a recession is feasible.
Last week, the Fed kept interest rates unchanged for the second consecutive time after 11 rate hikes. The personal consumption expenditures price index indicates that core inflation is currently at 3.7% on an annual basis — well above the 2% annual target set by the Fed. However, Goolsbee noted that the rate of inflation has significantly decreased this year, similar to the drop seen in 1982.
Despite the challenging economic conditions, the GDP expanded at a strong 4.9% annualized rate in the third quarter. Goolsbee emphasized that navigating this “golden path” amidst surging inflation will not be easy. In addition, he stressed the central bank’s continued reliance on data for its future decisions, echoing the sentiments expressed by Chair Jerome Powell.
Goolsbee’s remarks reflect a cautious yet optimistic approach in navigating the current economic landscape amid inflationary pressures.
