(MT Newswires) -- Chicago Fed President Austan Goolsbee says it would be premature to cut interest rates in March, stressing the importance of waiting for future economic data. He notes that the economy is performing strongly in terms of employment and GDP, and that inflation is improving, having been around or below the Fed's target for seven consecutive months, which could indicate a gradual return to a less accommodative policy.
Goolsbee refrains from speculating on deeper rate cuts, such as a 50 basis point cut, and points out that the Fed's projection in December envisaged three rate cuts by 2024, totalling a 75 basis point reduction.
He points out that the PCE index is the Fed's preferred measure of consumer price adjustments. He refutes the idea that the recent strong employment figures are inflated by seasonal adjustments, explaining that strong employment figures do not necessarily translate into an overheated economy, especially if inflation is falling.
On the inverted yield curve, Austan Goolsbee questions its ability to signal a recession in the current economic climate. The inverted yield curve occurs when short-term interest rates are higher than long-term rates, which is often interpreted as a harbinger of economic recession, as it may indicate that investors expect interest rates to fall in the future in response to an economic slowdown.
He notes that the difficulties experienced by New York Community Bank do not necessarily presage a widespread crisis in the regional banking sector. He attributes the current credit crunch primarily to rising interest rates, with no indication that the tightening of credit conditions is exceeding expectations.
