Chicago Federal Reserve President Austan Goolsbee said both an interest-rate increase and a pause remain possible at the US central bank’s next policy meeting, as officials weigh persistent inflation against signs of a cooling labour market.
Goolsbee said on Friday that the latest employment data showed the labour market remained relatively steady, but stressed that inflation was still the bigger concern for monetary policy. He said policymakers needed more evidence that inflation was moving back towards the Fed’s 2% target.
The comments came after US employers added just 29,000 jobs in September, far below the 90,000 economists had expected. The unemployment rate rose to 4.2% from 4.1%, while wage growth slowed.
The weaker jobs figures have reduced market expectations of an October rate increase. Investors are now waiting for September inflation data, along with developments in energy prices and the wider economy, before the Fed’s October 27-28 meeting.
The Fed raised its benchmark interest rate by 25 basis points last month to a range of 3.75%-4.00%, its first increase in three years. Officials had indicated that further increases could be needed if inflationary pressures persist.
Goolsbee’s comments underline the uncertainty facing policymakers as they balance the need to contain inflation against the risk that tighter monetary policy could weaken employment.
Leave a comment