Key Fed official sees possible 'golden path' toward lower inflation without a recession
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, suggested that the economy appears to be on what he calls the “golden path,” another term for what economists often term a “soft landing,” in which the Fed would curb inflation without ...
WASHINGTON — Austan Goolsbee, president of the Federal Reserve Bank of Chicago, suggested Monday that the economy appears to be on what he calls the “golden path,” another term for what economists call a “soft landing,” in which the Fed would curb inflation without causing a deep recession.
“Any time we’ve had a serious cut to the inflation rate, it’s come with a major recession," Goolsbee said in an interview with The Associated Press. “And so the golden path is a… bigger soft landing than conventional wisdom believes has ever been possible. I still think it is possible.”
At the same time, he cautioned: «I haven’t moved so far as to say that that’s what my prediction is.”
Goolsbee declined to comment on the likely future path for the Fed's key short-term interest rate. Nor would he say what his thoughts were about the timing of an eventual cut in interest rates.
But Goolsbee's optimistic outlook for inflation underscores why analysts increasingly think the Fed's next move will be a rate cut, rather than an increase. Wall Street investors foresee essentially no chance of a rate hike at the Fed's meetings in December or January. They put the likelihood of a rate cut in March at 28% — about double the perceived likelihood a month ago — and roughly a 58% chance of a cut in May.
Goolsbee also said he thought inflation would continue to slow toward the Fed's target of 2%. Partly in response to the higher borrowing costs that the Fed has engineered, inflation has fallen
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