Chicago Fed President Austan Goolsbee on Thursday suggested the Fed is almost done raising interest rates.
“We are very rapidly approaching the time when our argument is not going to be about how high should the rates go,” Goolsbee said, in an interview on NPR’s Marketplace radio program. “It’s going to be an argument of how long do we need to keep the rates at this position before we’re sure that we’re on the path back to the target” of 2% inflation.
On the question of how long rates will stay high, Goolsbee said the Fed’s collective forecast has been that rates need “to remain up for some relatively extended period.”
Fed officials will present an updated forecast for interest rates though 2026 after their next meeting on Sept. 19-20.
Traders in derivative markets think the Fed will hold rates steady at their September meeting. They see a better change of a hike at the following Fed meeting on Nov. 1.
The Chicago Fed president, who is a voting member of the Fed’s interest-rate committee this year, said it is possible that the Fed can get inflation “down a lot” without having a serious recession.
He has called this “the golden path.”
Researchers at his regional Fed bank released a paper on Wednesday saying that the current rate levels are sufficient to bring inflation back down to 2% by the middle of next year without a recession.
Goolsbee said the research is one piece of the data coming in saying the Fed should be focused on the persistence of high rates, not the level.