Posisi suku bunga Federal Reserve sedang mengalami perubahan; Komentar Goolsbee mungkin adalah bukti terbaru

The Federal Reserve’s monetary policy outlook appears to be shifting from rate cuts to potential rate hikes, with the latest evidence being the remarks of Chicago Fed President Austan Goolsbee.

On Monday, Goolsbee stated that the central bank might need to tighten monetary policy to counteract the impact of rising oil prices on the U.S. economy. This marks a significant shift from his stance just a few weeks ago.

In an interview, Goolsbee said that all options are on the table, and interest rates could move in any direction.

Goolsbee said, “If inflation performs well, we might return to a environment of multiple rate cuts within the year. I can also foresee that if things turn the other way, with inflation spiraling out of control, we will need to raise rates.”

Tim Duy, chief economist at SGH Macro Advisors, said that if Federal Reserve officials ultimately decide to hike rates, it would signify a major policy shift, as officials have been “highly focused on” rate cuts over the past few months.

At last week’s meeting, Fed officials kept interest rates unchanged and maintained the path for rate cuts this year, but a few officials proposed modifying the statement to indicate that the next move could be either a rate cut or a rate hike. Some economists expect this wording adjustment to appear at the Fed’s next meeting at the end of April.

The Fed has two mandates: stable inflation and low unemployment. Oil price shocks could lead to stagflation, which involves rising gasoline and food prices while weakening demand and the labor market.

This puts the Fed in a dilemma. Should it focus on the soft labor market or the rising prices?

In the interview, Goolsbee said he is more concerned about inflation than the labor market.

He said, “We are already operating under an inflation rate that is uncomfortably high and well above the target, and now with the potential for ongoing oil price shocks, this makes for a tense and uncertain moment.”

Inflation has been above the Fed’s 2% target for five years.

This is a major shift. Just over three weeks ago, before the U.S. and Israel launched strikes on Iran, Goolsbee had repeatedly stated that he believed the Fed would eventually be able to cut rates this year.

Duy from SGH Macro Advisors said, “This will be a bitter pill to swallow.”

He added, “If inflation issues dominate in the short term, the signal to the Fed will be that it needs to create demand destruction greater than the oil price shocks themselves to maintain downward pressure on inflation and inflation expectations.” He also noted that the Fed is unlikely to rush into rate hikes.

Market traders previously expected two 25 basis point rate cuts this year, but now their outlook has completely reversed, with expectations that rates will remain unchanged until the end of the year, and the probability of a rate hike by the Fed is about 8%.

Milan Still Prefers Multiple Rate Cuts This Year

Although many central bank officials are talking more about rate hikes, at least one still advocates for rate cuts. Federal Reserve Board Member Stephen M. Miran said he believes the Fed could cut rates four times this year. Miran previously served as chief economist at the Trump White House.

Miran said that the Fed’s traditional view is that the central bank can “ignore” oil price shocks because, although they affect overall inflation, the price increases do not pass through to core prices excluding food and energy.

An exception to this rule is if inflation expectations for over a year start to rise.

Miran said, “So far, that has not happened.”

Another exception is if rising gasoline prices lead to a wage-price spiral.

He said, “There is little evidence to support that. In fact, wage pressures have been declining over the past few years.”

When the Fed decided to keep rates unchanged last week, Miran was the only dissenter. He advocated for rate cuts.