Another Fed official is announcing that interest rate cuts are coming: there is a risk of recession if you wait too long.

Another Fed official hinted that the Fed was closer to cutting interest rates. This time, it was the doves-Chicago Fed President goolsbee.

On Thursday, July 28th, US Eastern Time, goolsbee, who has the right to vote at the FOMC meeting of the Federal Reserve's Monetary Policy Committee in 2025, warned that if Fed officials wait too long to relax monetary policy, they will risk causing economic recession. He told the media that the Fed may need to reduce the borrowing cost soon to avoid further deterioration of the labor market that has been cooling in recent months.

Goolsbee said that the Fed's inflation struggle is still going on, but the continuous improvement of inflation data for several months convinced him that inflation has returned to the right track of falling to the Fed's target of 2%. Reducing inflation "is not finished yet, but I feel much better when I see the data improving for several months in a row." He pointed out that the labor market in the United States "is definitely a worrying area". While the price pressure has eased, keeping interest rates high means that monetary policy has been "substantially tightened".

Goolsbee declined to say when he expected to cut interest rates. When asked if the Fed has the basis to cut interest rates, goolsbee replied that this is the way to achieve the target of 2%. Asked whether Fed officials would threaten goolsbee's "golden road"-the prospect of winning the war against inflation without triggering a recession, goolsbee immediately replied: "Yes. If we want to be as restrictive as we are now, we are taking risks in golden road. "

Goolsbee said that the real federal funds rate, that is, the difference between interest rate and inflation rate, is at a high level for decades. This means that the real federal funds rate has been greatly tightened. "When will you want this restriction (environment)? As I said, if you are worried about overheating, you should adopt restrictive policies, and the economy is not overheating. "

Also on Thursday, Dallas Fed President Logan, who has the right to vote at the FOMC meeting in 2026, did not talk about monetary policy. She told the Dallas Fed's meeting on banking financing that the Fed is making progress in ensuring that banks can take advantage of the Fed's emergency liquidity when necessary. The discount window of the Federal Reserve, that is, the liquidity tool that the Federal Reserve provides loans to deposit-taking banks, "effectively supports the stability of banks and financial systems, and thus promotes the flow of credit to households and enterprises".

Logan believes that the current federal deposit insurance limit may be too low, especially considering that the collapse of the Silicon Valley Bank last year detonated the US banking crisis. The last time the US Congress raised the federal insurance deposit limit was in 2008, and since then, the economy has grown substantially. If the limit and GDP of this kind of deposit insurance increase year-on-year, the current upper limit of Nano is close to 500,000 US dollars due to Gaga I, far exceeding the 250,000 US dollars since 2008. The demand for protecting depositors after the bank failure in Silicon Valley shows that this ceiling is too low.

Before goolsbee and Logan spoke, earlier this week, several senior Fed officials hinted that a rate cut was coming.

Federal Reserve Chairman Powell said on Monday that including last week's data, inflation in the United States made more progress in the second quarter of this year. The last three inflation reports were "quite good" and "indeed enhanced" the Fed's confidence that inflation would continue to fall to the target.

On Wednesday, new york Federal Reserve Chairman William Williams said that if inflation continues to slow down, he will cut interest rates in the next few months. There are signs that the labor market in the United States is cooling down, and the inflation data in the past three months are "getting closer and closer to the deflation we want".

Federal Reserve Governor Waller, who was accused of being a popular candidate for the next Fed chairman earlier this year, said on Wednesday that the Fed was closer to cutting interest rates, but hinted that the time had not yet come. The media believe that Waller's remarks show a change in his attitude. Because he hinted two months ago that it might not be necessary to cut interest rates before December this year, he said on Wednesday that the latest data showed that inflation had resumed its downward progress, and hinted that he hoped to see "more evidence" that inflation was on the right track of continuous decline.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.