WSJ's Take On the Week
Interest-Rate Cuts Coming? Chicago Fed’s Austan Goolsbee Has Thoughts
Dec 20, 2023
Chicago Fed President Austan Goolsbee discusses potential interest rate hikes, the risk of recession, and shifting the Fed's focus to the U.S. labor market. The podcast explores varying opinions on rate cuts within the Federal Reserve and the influence of the Fed's actions on inequality.
28:16
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Quick takeaways
- Chicago Fed's Austan Goolsbee suggests shifting focus from inflation to the slowing U.S. labor market.
- There is uncertainty among investors regarding interest rate cuts as different Fed officials express contradictory views.
Deep dives
Market Expectations of Fed Rate Cuts
Following the Federal Reserve meeting, market expectations for U.S. interest rate cuts dramatically increased. The Fed funds futures market indicated that investors were betting on at least six rate cuts next year. This anticipation of rate cuts is expected to drive stock prices to new highs in 2024, as stated by firms such as Bank of America and RBC Capital Markets. However, there is still uncertainty among investors, as the Fed Chair Jerome Powell did not contradict these expectations, but the New York Fed President John Williams stated that the central bank was not considering rate cuts and may even need to raise rates.
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