In an interview with MarketWatch, Chicago Fed President Austan Goolsbee indicated that the current economic data justifies multiple interest rate cuts, with the process beginning soon.

Goolsbee pointed out that inflation is coming down “very significantly,” while the unemployment rate is “rising faster,” suggesting a cooling labor market.

He expressed concern that the persistent weakness in the job market could “turn into something worse” if the trend continues.

Given the balance of more favorable inflation data and deteriorating unemployment figures, Goolsbee suggested that the path forward is “not just rate cuts soon,” hinting at a sustained easing cycle by Fed.

In an interview with Reuters, San Francisco Fed President Mary Daly acknowledged that a rate cut is widely expected this month, but emphasized that the exact size of the cut remains uncertain.

“We don’t know yet, right?” Daly said, noting that key data such as the upcoming labor market and CPI reports will play a critical role in the decision-making process. She added, “I want more time to do all the work that’s needed to make the best decision.”

Daly also warned of the risks of over-tightening, particularly as inflation eases while the economy slows. “As inflation falls, we’ve got a real rate of interest that’s rising into a slowing economy; that’s a basic recipe for over-tightening,” she explained.

Highlighting the importance of protecting the labor market, she stressed that further slowing would be “unwelcome” and a key factor in shaping future policy decisions.

Fed’s latest Beige Book report highlights a growing economic slowdown across the US. While economic activity grew slightly in three Districts, the number of Districts reporting flat or declining activity increased from five in the previous period to nine in the current period, indicating broader stagnation.

Employment levels were generally “flat to up slightly”, with five Districts noting modest increases in headcounts. However, some Districts reported that firms are reducing shifts, leaving positions unfilled, or trimming headcounts through attrition, though layoffs remain uncommon. Wage growth continues at a modest pace, consistent with the recent trend of slowing wage increases.

Overall, prices increased modestly during the reporting period, but three Districts saw only slight rises in selling prices. Nonlabor input costs were mostly described as modest to moderate and generally easing, though one District reported a slight uptick in input cost increases.

Full Fed’s Beige Book report here.

In an essay published today, Atlanta Fed President Raphael Bostic emphasized Fed’s dual mandate of price stability and maximum employment.

While he has been “intensely focused” on controlling inflation for the past three years, “that’s changing” as eroding pricing power and a cooling labor market come into play.

“I’ve rebalanced my focus toward both sides of the dual mandate for the first time since early 2021,” he wrote.

Bostic emphasized that while inflation is not yet fully under control, saying “I am not quite prepared to declare victory over inflation,” Fed must also avoid keeping monetary policy too restrictive for too long.

He stressed the importance of not waiting until inflation reaches the 2% target to begin easing, as maintaining high interest rates for too long could cause “labor market disruptions that could inflict unnecessary pain and suffering.”

Full essay of Fed’s Bostic here.