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Federal Reserve Watch for Sept. 21: Goolsbee Hints at More Rate Hikes if Inflation is Demand-Driven

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Chicago Fed President Austan Goolsbee (nonvoter) said that strong demand could also be driving inflation and that the Fed's job of lower the pace of price growth back down to the 2% goal may necessitate further rate increases that could negatively impact employment and economic growth.

Recent comments of note:

(Sept. 18) Kansas City Fed President Jeffrey Schmid (nonvoter) said that he agreed with the FOMC's decision to raise the target for federal funds rate by 25 basis points, saying that inflation remains elevated.

(Sept. 16) Fed Chair Kevin Warsh said that inflation remains elevated while the labor markets is strong, leading the FOMC to act to slow inflation at is meeting. Warsh repeated that the labor market remains strong and the economy as a whole is strengthening, putting the emphasis on lowering inflation.

(Sept. 16) At its meeting, the Federal Open Market Committee voted 12-0 to raise the target range for its federal funds to 3.75% to 4.00% saying that inflation remains elevated and raising the target range will "support a timelier return to the Committee's 2% goal." The updated Summary of Economic Projections suggested a further rate increase is possible for 2026, followed by no adjustment in 2027 before the rate is reduced in 2028. However, nearly half of the participants said one more increase may be needed in 2027, so the median could shift at the next update.

What else is happening in International?

International

New Zealand Credit Card Spending, Balances Rise Slightly in August

Credit card spending in New Zealand rose by 0.2% month-over-month to NZ$4.46 billion in August, while credit card balances increased 0.3% to NZ$5.94 billion, data from the Reserve Bank of New Zealand showed Monday.Compared with the year-earlier period, credit card spending climbed 3.5% in August, while credit card balances declined 1.2%.Domestic billings on New Zealand-issued cards rose by 0.4% to NZ$3.93 billion in August, following a 0.9% increase in the previous month. Billings on overseas-issued cards rose month-over-month to NZ$528 million from NZ$522 million, while overseas billings on New Zealand-issued cards fell to NZ$768 million from NZ$822 million.

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International

Rightmove: UK Residential Asking Prices Rise 0.7% MoM in September

Average newly listed asking prices in the UK increased 0.7% month over month in September, after a 2% decline in August, according to data from property portal Rightmove published Monday.The latest reading represented the first monthly price growth since May.On a yearly basis, average asking house prices in the UK were down 0.8%, after a 1% fall in the previous month.

FTSE 100
International

Real GDP Growth Forecast Accuracy Varies; Differences Rarely 'Statistically Significant,' Research Says

One forecaster generally outperformed another when evaluating the accuracy of real gross domestic product (GDP) growth expectations among forecasting organizations for individual economies, but the differences are often not "statistically significant," according to a research discussion paper released by the Reserve Bank of Australia on Monday.The researchers studied the properties of real GDP forecasts by four international organizations, comprising the International Monetary Fund, the World Bank, the European Commission and the Organization for Economic Cooperation and Development.The findings suggest that the differences may result from chance rather than indicate better forecasting ability.Conversely, the researchers found statistically significant deviations from forecast rationality for each forecaster, with common reasons including optimistic bias, excessive revisions, and extreme forecasts.

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