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  • Writer's pictureBy The Financial District

Gov't Must Be Cautious In Fight vs Inflation: Fed Exec

The banking crisis could help the Federal Reserve’s fight to bring down inflation, but the central bank needs to be “cautious” in its actions moving forward, Chicago Fed President Austan Goolsbee said, Alicia Wallace reported for CNN.


Photo Insert: Instead of financial issues trumping monetary policy concerns, financial conditions should certainly be included in monetary policy discussions, Chicago Fed President Austin Goolsbee said.



Goolsbee, the newest Fed appointee, spoke before the Economic Club of Chicago and addressed the “new, big, hairy elephant in the room” that was the recent failure of two regional banks, Silicon Valley Bank and Signature Bank, and subsequent market turmoil.


“At moments of financial stress like this, the right monetary policy is really caution and watchfulness and prudence,” he said.



“And I don’t say that because I think we should stop prioritizing the fight against inflation just because markets got upset.”


But instead of financial issues trumping monetary policy concerns, financial conditions should certainly be included in monetary policy discussions, Goolsbee said.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

“History has taught us that in moments of financial stress, even if they don’t escalate into a crisis, they often mean tighter credit conditions and have a material impact on the real economy in a way that the Fed absolutely needs to take into account when setting monetary policy,” he said.


Currently, he added, there’s no conflict between monetary policy and potentially tightening credit conditions. They would work in tandem to cool inflation, he said.





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