Chicago Fed President Goolsbee says if economy deteriorates, Fed will 'fix it'
Chicago Federal Reserve President Austan Goolsbee on Monday vowed that the central bank would react to signs of weakness in the economy and indicated that interest rates could be too restrictive now.
Asked whether weakening in the labor market and manufacturing sector could prompt a response from the Fed, Goolsbee did not commit to a specific course of action but said it does not make sense to keep a «restrictive» policy stance if the economy is weakening. He also declined to comment on whether the Fed would institute an emergency intermeeting cut.
«The Fed's job is very straightforward: maximize employment, stabilize prices and maintain financial stability. That's what we're going to do,» the central bank official said during an interview on CNBC's "Squawk Box" program. «We're forward-looking about it. So if the conditions collectively start coming in like that on the through line, there's deterioration on any of those parts, we're going to fix it.»
The interview occurred with markets in turmoil.
Futures tied to the Dow Jones Industrial Average were off nearly 1,300 points, or close to 3%, as Treasury yields plummeted. The moves continued a downward trajectory that began Thursday, a day after the Fed opted not to lower interest rates, raising concerns that policymakers were behind the curve as inflation falls and the economy weakens.
Those fears were heightened Friday when the Labor Department said nonfarm payrolls increased by just 114,000 and the unemployment rate climbed to 4.3%, triggering a signal known as the Sahm Rule that the economy could be in recession.
However, Goolsbee said he does not believe that to be the case.
«Jobs numbers came in weaker than expected, but [are] not looking yet like recession,» he
Read more on cnbc.com
