Yahoo Finance's Jennifer Schoenberger speaks with Chicago Fed President Austan Goolsby about Fed Chairman Jerome Powell's recent press conference and how Goolsby sees the economy in the coming months. The main points of discussion are the following:
#1: Inflation indicators are “opaque”
Goolsby said recent key measures of CPI and core PCE “remained higher than we would expect” in February, but have fallen recently. For Goolsby, these measurements, while encouraging, indicate that “we're in a bit of an uncertain time” regarding CPI and core PCE data.
#2: Three rate cuts “side by side”
Mr. Schoenberger asked Mr. Goolsby whether the Fed's decision to cut interest rates three times by the median this year was consistent with his thinking, and Mr. Goolsby acknowledged that, “The outline of the economic forecast is It's not forward guidance…we're not…intentionally planning for future meetings. ”
#3: Breaking the “Taylor Rule”
Mr. Goolsby defines the Taylor rule, which is a formula that says, “If you plug in the inflation rate, if you plug in the unemployment rate…it says, 'This is what the Fed has done in the past.''' This formula is a useful tool. However, Mr. Goolsby warns against “being too mechanically bound to “let's do what the official says'' when it comes to the Fed's decision-making.
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