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The Key Takeaways
- Federal Reserve officials said that while Friday's jobs data looked promising, they were still looking at larger labor market trends.
- Beth Hammack, President of the Cleveland Federal Reserve Bank, said that due to economic strength it may be necessary for interest rates to be reduced more gradually.
- Austan Goolsbee, the Chicago Fed president, did not give a specific timetable of interest rate reductions. Austan Goolsbee did mention that more rate reductions are expected over the course of next year.
Federal Reserve officials stated that with the recent U.S. Employment Report showing a rebound in jobs, the U.S. labor market is in good shape. The Federal Reserve officials say that the labor market is in a good place, but that does not mean that rates should be cut.
“The labor market remains in a good position. Jobs are expanding, there’s about one vacancy for every unemployed worker. So that's a balanced labor market. That's a good thing,” Mary Daly, president of San Francisco Federal Reserve Bank, spoke at an Economic Forum.
Austan Goolsbee, President of the Chicago Federal Reserve Bank, cautioned against comparing November’s results with those from previous months. However, he said that they appeared to be promising. After a month of strikes and weather disruptions, the report shows that 227,000 new jobs were added by employers.
“The job market was cooling for a while from the hottest that we've ever seen to something like sustainable full employment,” Goolsbee said at an economics conference in Chicago. “And the last several months feel like it's hovered around in that space.”
Data Fed will Examine Before Making Rate Decisions includes Data on the Labor Market
Fed officials use the labor market as one of their data points when they decide where to set rates. Because the economy is performing well, Beth Hammack, President of Cleveland Federal Reserve Bank, said that there might not be much space to reduce interest rates when Fed officials gather in December.
“As I take into account strong economic growth, the low unemployment rate, still-elevated inflation, and signals from financial markets, among other factors, my overall view is that monetary policy is only somewhat restrictive today,” Hammack says
Goolsbee did not comment on the Fed’s next decision to cut interest rates, but he does believe that the economic climate will lead to further rate cuts in the future.
“Over the next year, if conditions evolve the way they have been at—the way that I expect them to—rates are going to be a fair bit lower than where they are today,” Goolsbee stated.
On Friday, Federal Reserve officials will have the final opportunity to comment before the beginning of the “blackout” period for the Federal Open Market Committee meeting on December 17-18.
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