The Fed is expected to be under a lot of pressure in March. Economic expectations, especially the rate hike, entail a process in which the Fed will be closely watched around the world. As such, any statements made by the Fed will continue to be closely watched. Finally, Austan Goolsbee’s statements were much discussed in a question and answer session. Now his words will be interpreted with the markets’ reactions.
What Did Austan Goolsbee Say?
Chicago Fed President Austan Goolsbee, who took office last month, said central banks should not make decisions based on investors’ immediate reactions to the news because economic data arrive with a lag.
Chicago Fed President Austan Goolsbee said central banks should focus on the performance of the economy, not financial markets, when choosing the best monetary policy stance.
This Is His First Official Speech
Goolsbee, who took office last month and spoke publicly for the first time since taking office, had participated in a series of question-and-answer sessions at the Fed before taking office. Now, in an environment where economic data are arriving late, he attracted attention with his speech arguing that central banks should not make decisions based on investors’ immediate reactions to the news.
It is a danger and a mistake for policymakers to rely too much on market reactions. Our job is to make decisions based on the actual state of the economy. The Chicago Fed President is a voting member of the FOMC this year.
Voting Eligibility Recognized
Many economics-related websites and columnists supported Goolsbee’s statements. In particular, economists agree that economic developments are extremely important compared to market developments. This does not mean, however, that we turn our backs on economic developments….
