Federal Reserve's Goolsbee: Maintaining high interest rates while inflation is falling is equivalent to tightening policy
Chicago Fed President Charles Evans said in an interview that credit conditions in the United States are tightening and still tightening. Although it is uncertain whether the Fed will cut interest rates next month as widely expected by the market, not cutting rates could potentially harm the job market. He said, "When you set interest rates as high as they are now and keep them at that level while inflation is falling, you are actually tightening policy." While there are both positive and concerning aspects in the economic data, he mentioned that "if overly tight monetary policy is maintained for too long, the Fed's mission in terms of employment will be compromised."
On August 19th, according to data from CINNO Research, Chicago Fed President Guersby said in an interview that credit conditions in the United States are tightening and are still trending tighter. Although it is uncertain whether the Fed will cut interest rates next month as widely expected by the market, not cutting rates may harm the job market. He said, "When you set interest rates as high as they are now and keep them at that level while inflation is falling, you are actually tightening policy." While economic data has both positive and more worrying aspects, he said, "If overly tight monetary policy is maintained for too long, the Fed's mission in terms of employment will be compromised."