The Fed: Goolsbee and Kashkari see higher odds of Fed curbing inflation without a recession

by | Jul 31, 2023 | Stock Market

A pair of senior officials at the Federal Reserve say they are more hopeful the U.S. might avoid a recession even as the central bank raises interest rates to battle high inflation. Austan Goolsbee, president of the Chicago Federal Reserve, said in an interview with Yahoo Finance on Monday that it would be a “historic triumph” for the central bank to achieve a so-called soft landing.

He was referring to a rarely achieved scenario in which the Fed subdues inflation without causing a recession. Goolsbee referred to such an outcome as a “golden path.” Minneapolis President Neel Kashkari also sounded optimistic in an interview Sunday on CBS News’ “Face the Nation.” The U.S. economy is making surprisingly good progress, and returning to pre-pandemic levels is “absolutely achievable,” Kashkari said Sunday. Yet both Goolsbee and Kashkari declined to rule out another increase in interest rates at the Fed’s next big meeting in September. The Fed raised rates again last week to a top end of 5.5% from near zero less than a year and a half ago. Kashkari noted that core inflation, now around 4.1%, is still double the Fed’s 2% target. “We don’t want to declare victory,” he said, adding, “If we need to raise rates further from here, we will do so.” Goolsbee also said he would wait and see. “I’m open to reading the data. If there’s a major change of conditions, I haven’t made up my mind for what should happen in September,” said Goolsbee, who is a voting member of the Fed’s interest-rate setting committee. Kashkari is as w …

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