The Fed’s constant narrative shield of its ‘apolitical-ness’ took a battering this morning when Chicago Fed President Austan Goolsbee said the quiet part out loud during an interview on Fox News.
With the market implying a 50-50 chance of The Fed cutting 25bps or 50bps in September…
…the affable Fed head was asked the ubiquitous question of whether monetary policymakers weigh their ‘mandate-only-driven’ decision to cut rates against the ‘political’ benefits of cutting rates in an election year.
The correct answer to this question is simple – “No!” – The Fed does not consider the election cycle and is data-driven (or some such gaslighting).
Goolsbee’s answer, however, left some room for the ‘grey’ when he admitted that it makes him “a little” uncomfortable that the Fed may start cutting interest rates close to the US presidential election in November.
He did recover quickly, by adding that elections come regularly
“So whatever the Fed does, somebody’s going to say they didn’t like that. All we can do in the Fed is commit to the thing that would be driving our decisions – the dual mandate”
Of course, Goolsbee wouldn’t be the first Fed-related member to crack the door of politicization open…
In his post-Fed existence, Bill Dudley is of course best known for writing that infamous August 2019 Bloomberg op-ed, in which he called for the Fed to hike rates into the last months of Trump first administration to scuttle his odds of re-election…
Watch the full exchange with Goolsbee here:
Pretty wild thing for a voting member to say. He cleans up afterwards but this is not something you should be saying imo. https://t.co/RgznPDG8Re pic.twitter.com/3qxYEtDUBy
— Paul E Williams (@PEWilliams_) August 8, 2024
