Chicago Fed President Austan Goolsbee stressed the importance of a cautious approach to monetary policy during times of financial stress. He stated yesterday, “At moments like this, of financial stress, the right monetary approach calls for prudence and patience – for assessing the potential impact of financial stress on the real economy.”
Goolsbee highlighted the need to understand credit tightening before Fed’s next meeting in May, saying, “The foremost thing on my mind before our next meeting in May is trying to get a handle on this question about credit: is it actually credit tightening?”
Emphasizing the current uncertainty, Goolsbee urged caution, adding, “We should gather further data and be careful about raising rates too aggressively until we see how much work the headwinds are doing for us in getting down inflation.” He noted that if the response to recent banking issues leads to financial tightening, “monetary policy has to do less.”
