News from the Financial Associated Press on May 6 (edited by Xia Junxiong)On Friday (May 5), local time (May 5), Chicago Fed President Goolsbee said it was too early to judge what the Fed will do at its June meeting.
Goolsbee is one of the most dovish Fed policymakers among current Fed policymakers. He said ahead of this month’s rate meeting that the Fed should be cautious and patient in raising rates, especially as it assesses the economic impact of tightening lending after several regional bank failures.
At this week’s interest rate meeting, officials including Goolsby voted unanimously to raise interest rates by 25 basis points, raising the target range for the federal funds rate to 5%-5.25%, the highest level since March 2001. Since the start of the rate hike cycle in March last year, the Fed has raised interest rates 10 times in a row, accumulatively raising interest rates by 500 basis points, which is the most aggressive rate hike cycle since the 1980s.
In the early hours of Thursday, Beijing time, Federal Reserve Chairman Powell said after the interest rate meeting that the current interest rate is close to or may have reached a level sufficient to reduce inflation, and the Fed will decide on monetary policy in meeting-by-meeting based on future economic data. The Federal Reserve will hold its next interest rate meeting on June 13-14, local time.
Goolsbee said in an interview on Friday that it was too early to tell how monetary policy will be handled in June. Referring to the banking turmoil, he said he was paying particular attention to the credit situation in light of the recent First Republic bankruptcy and the struggles of other regional banks.
Goolsbee pointed out that credit conditions have historically been associated with recessions and credit crunches, which in some ways have consequences similar to rate hikes.
“Whatever monetary policy is adopted, the impact on the banking system needs to be considered,” Goolsbee added.
After the Federal Reserve announced its interest rate decision this week, the market generally believes that this is the last rate hike of the central bank’s current monetary policy tightening cycle. However, the non-agricultural data in April made the Fed’s future monetary policy direction face more uncertainty.
Data released Friday showed an increase of 253,000, higher than economists’ forecast of 185,000, or 3.4%, and average hourly earnings rose 4.4% from a year earlier. The continued hotness in the labor market has fueled speculation that the Fed will need to raise interest rates further.
The head of the St. Louis Fed, a hawk among Fed officials, said on Friday the central bank may have to keep raising interest rates, though he was open to a policy decision at its June meeting.