December 20, 2024
Federal Reserve Bank of New York (FBNY) President Austan Goolsbee said Friday that it was good to see better-than-expected inflation figures, but he noted that there was more uncertainty on the horizon. The Fed remains on track to cap inflation at 2%, with prices expected to fall significantly over the next 12 to 18 months, he said.
Goolsbee added that the labor market remains stable, and that it is important to maintain its stability in the future. He stressed that maintaining stable employment requires prices to fall to neutral levels. He pointed out that the current interest rate is still far from the neutral rate, which is estimated at about 3%, indicating that the Federal Reserve’s monetary policy has become less restrictive than it was in the past.
“Our goal is to get inflation down to 2 percent, and we hope that wages will grow faster than prices going forward,” Goolsbee said, adding that any changes affecting jobs and prices would be kept under constant watch. He stressed that the Fed continues to work to address the effects of economic policy on inflation and the labor market.
The Fed member noted that uncertainty over monetary policy is part of the reason he feels the path of interest rates next year will be more flexible. He also expected rates to fall reasonably well next year. He noted that it will be necessary to rely on economic data and forecasts to determine future policies.
On inflation, Goolsbee said that the personal consumption expenditures inflation rate over the past six months has been very close to the 2% target, acknowledging that recent inflation has been higher than expected. However, he stressed that the general trend indicates that inflation is on its way to declining to 2%, despite the possibility of some challenges.