Chicago Fed President Austan Goolsbee has dismissed claims that progress toward reaching the Federal Reserve’s 2% inflation target has slowed. In an interview with the Financial Times, Goolsbee emphasized that the recent slowdown in inflation is not a short-lived occurrence but rather a steady trend. He stated, “There is evidence suggesting that inflation has consistently been trending down, which aligns with our objectives.” Goolsbee firmly believes that this decline is consistent and not merely a temporary blip.
September Consumer Price Index (CPI) Figures
The September CPI figures demonstrate a slight increase, with a recorded value of 0.4%, slightly above expectations. The annual rate of inflation has remained stable at 3.7%. However, economists caution against drawing premature conclusions based on this data.
For instance, Douglas Porter, Chief Economist at BMO Capital Markets, highlights that both headline and core inflation rates appear to have settled around the 4% mark. This observation prompts careful analysis and continued evaluation.
The Path to Gradual Interest Rate Adjustments
As a voting member of the Fed’s interest-rate committee, Goolsbee shares his thoughts on the potential for a rate hike in November. He reveals that he hasn’t reached a definitive decision yet. Goolsbee aligns himself with Fed officials who believe that the time has come to shift focus from discussing the extent of future rate hikes to determining the duration at which such rates should be maintained.
It is important to note that traders in derivative markets currently assign less than a 10% chance of a rate hike occurring during the Fed’s upcoming Oct. 31-Nov. 1 meeting.
Upcoming Fed Communication and Anticipated Actions
The week ahead will feature multiple speeches from various Fed officials, culminating in a key address from Fed Chair Jerome Powell on Thursday. Following this speech, the Fed will enter a communications blackout period.
Sam Bullard, Senior Economist at Wells Fargo, predicts that Powell will skillfully navigate the delicate balance between signaling a willingness to delay rate hikes during the November Federal Open Market Committee (FOMC) meeting while also emphasizing that, if necessary, rate adjustments might be implemented during the December meeting.
Market Indicators
In early Monday trading, the 10-year Treasury note yield (BX:TMUBMUSD10Y) experienced an 8 basis points increase, reaching 4.71%.
