Chicago Federal Reserve President Austin Goolsbee said Monday that everything is always on the table, including interest rate hikes or cuts, after the collapses in markets around the world.
Friday’s employment data was weaker than expected but does not yet appear to indicate a recession, Goolsbee said.
The US Labor Department said on Thursday that nonfarm payrolls increased by 114,000 jobs last month, well below the median forecast of 175,000 jobs in a Reuters poll of economists.
It’s also far short of the 200,000 jobs economists believe are needed to keep up with population growth.
The unemployment rate jumped to 4.3%, nearly a three-year high.
Restricted prices
The president of the Federal Reserve Bank of Chicago pledged during an interview on CNBC’s “Squawk Box” that the central bank will respond to signs of weakness in the economy, suggesting that interest rates may be too tight now.
Asked whether weakness in the labor market and manufacturing sector might prompt the Fed to respond, he said there was no point in maintaining a “restrictive” monetary policy stance if the economy was weakening.
Goolsbee justified the central bank’s patience by saying that the Fed’s job is not to react to one month’s figures on jobs, noting that the Fed could wait for more data before its September meeting.
“There is some weakness in the labor market, and we have to pay attention to that,” the Fed member warned.
On the other hand, Goolsbee noted that GDP data was slightly stronger than expected.
Starter Trading
The Dow Jones Industrial Average fell 1,101 points, or 2.77%, to 38,636 at the start of trading today, while the Standard & Poor’s 500 Index fell 190 points, or 3.57%, to 5,155 points, while the Nasdaq Composite Index fell 884.85 points, or 5%, to 15,932 points.
The US central bank has kept its benchmark interest rate in a range of 5.25% to 5.5% since July 2023, the highest level in about 23 years.
