(Reuters) – The swift rise in financial market bets that the Federal Reserve will cut rates soon and quickly following comments by Fed Chair Jerome Powell last week has been at odds with how the rate-setting committee functions, Chicago Fed President Austan Goolsbee said on Monday.
“It’s not what you say or what the Chair says, it’s what do they hear and what do they want to hear?” Goolsbee said in reference to the response of financial markets in an interview with broadcaster CNBC.
“I was confused a bit… was the market just imputing ‘Here’s what we want them to be saying.’ I thought there seemed to be some confusion about how the FOMC even works. We don’t debate specific policies speculatively about the future,” he said.
Earlier on Monday, Cleveland Fed President Loretta Mester, who has a vote on policy in 2024 until she retires in June, also pushed back against financial market expectations of how abruptly the Fed will pivot to rate cuts.
(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)
