(Bloomberg) -- Federal Reserve Bank of Chicago President Austan Goolsbee reiterated the central bank’s job is not to react to one month of weaker labor data, adding markets are much more volatile than Fed actions.
A worse-than-forecast US jobs report Friday, which capped a soft week of data, spurred recession concerns and helped drive a global stocks rout. Goolsbee said there are some cautionary indicators — like the rise in consumer delinquencies — but economic growth continues at a “fairly steady level.”
“As you see jobs numbers come in weaker than expected but not looking yet like recession, I do think you want to be forward looking of where the economy is headed for making the decisions,” Goolsbee said on CNBC Monday.
“If we blow through normal, then we’re in a different situation and we would, in my opinion, we would need to react more robustly,” he said.
Goolsbee emphasized the margin of error — at 100,000 — for the monthly payrolls figure necessitates caution on making too big of conclusions.
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Policymakers kept interest rates unchanged at a more than two-decade high following their meeting last week, indicating they want to see more evidence that inflation is cooling before lowering borrowing costs. But Chair Jerome Powell said a rate cut could be appropriate as soon as the central bank’s September meeting.
The latest jobs report, with weaker hiring and an increase in the unemployment rate to 4.3% last month, has prompted some Fed watchers to argue that the central bank should have cut rates at the July meeting.
“The Fed’s job is very straightforward, maximize employment, stabilize prices and maintain financial stability,” Goolsbee said. “So if the conditions collectively start coming in that on the through line, there’s deterioration on any of those parts, we’re going to fix it.”
A number of economists — including those from Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. — now expect half-point rate cuts at both the September and November meetings.
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