-Chicago Federal Reserve Bank President Austan Goolsbee on Friday said it is “way too premature” to suggest that stronger-than-expected job gains in April mean the central bank will need to raise interest rates again when it meets again in June.
“We know that credit conditions like the ones we are seeing now in the past have been correlated with recessions, credit crunches,” Goolsbee told Fox News. “It’s way too premature to know what to do with monetary policy.”
Goolsbee voted with all other Fed policymakers on Wednesday to raise the Fed’s policy rate by a quarter point to 5.00%-5.25%. Fed Chair Jerome Powell said interest rates are now close to, or maybe at the point of, being high enough to bring down inflation, and that the central bank would make “meeting-by-meeting” decisions on policy based on its read of incoming economic data.
Goolsbee on Friday said he is paying particular attention to credit conditions, given the recent failure of First Republic Bank and the troubles of other regional banks.
“It has to give you some pause” about raising rates, he said, because tighter credit conditions are likely to slow the economy.
“Whatever tightening that you are going to need to do has got to take into account of … the banking system’s impact,” Goolsbee said.
(Reporting by Ann Saphir; editing by Jonathan Oatis)