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US ECONOMY “SLOWING”
Powell told the audience in Atlanta that the Fed was “very, very carefully watching as the economy appears to be slowing” in the final quarter of 2023, while noting a cooling in the hot labour market too.
The Fed is on the “path” to bringing inflation back down to 2 per cent without an accompanying surge in unemployment, he added.
Cutting inflation while avoiding a recession – commonly known as a “soft landing” – is challenging to pull off, but the US central bank recently suggested it could be on track to do so.
Austan Goolsbee, Powell’s colleague on the rate-setting FOMC, indicated Friday that he also thought the Fed was on target to meet its dual mandate of controlling both inflation and unemployment.
“The employment side is still looking really excellent, and inflation is coming down very rapidly,” Chicago Fed President Goolsbee told a conference in the city.
“That’s exactly what we promised and what we want to happen,” he added.
But Goolsbee warned that policymakers should not become complacent about the challenges they now face.
“We should be sobered by history that every previous time you’ve gotten inflation down a lot it has required a recession to do so, and sometimes a very serious one,” he said.
“On the optimistic side, I guess it’s that – look out the window!” he continued, adding that the Fed has brought inflation down “a lot” while maintaining a relatively low unemployment rate.
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