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Chicago Federal Reserve President Austan Goolsbee said Tuesday that a soft landing is still on the table as the central bank tries to combat inflation without significantly hurting the economy.
“Because of the strangeness of this moment, there is the possibility of the golden path … that we reduce inflation without a recession,” Goolsbee said on CNBC’s “Squawk Box.” “If that were to happen… it would simply be a continuation of what we’ve already seen this year, which is a very modest increase in unemployment while inflation has come down significantly… That’s our goal.”
The Fed kept interest rates steady last week, the second consecutive meeting the Federal Open Market Committee decided to hold, after a series of eleven rate hikes.
According to the Personal Consumer Expenditure Price Index, core inflation is currently at 3.7% annually, still well above the Fed’s annual target of 2%. Goolsbee emphasized that the decline in price pressure has already been a major achievement so far.
“The fastest decline in inflation in any year was 1982,” Goolsbee said. “We’ll see what happens in the coming months. We could match the fastest falling inflation in the last century. So we’re making progress on the inflation front.”
The economy has held up well so far despite the tightening measures of the past year and a half. Gross domestic product grew by 4.9% year on year in the third quarter, stronger than even high expectations.
Goolsbee emphasized that navigating such a “golden path” against a historic rise in inflation will not be an easy task.
“Unusual for a soft landing of this magnitude, there has never been a decline in the inflation rate to get inflation down as much as we do without a major recession. That never actually happened,” he said. “Let’s shoot to try to make that happen.”
The Fed president said the central bank will rely on data in the future, echoing Chairman Jerome Powell’s comments last week.
Powell previously said the central bank had not yet made any decisions for the December meeting, saying that “the committee will always do what it deems appropriate at the time.”
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