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Fed's Goolsbee reiterates case for extend path of rate cuts

BY Reuters | ECONOMIC | 09/30/24 01:02 PM EDT

By Michael S. Derby

NEW YORK, Sept 30 (Reuters) - Federal Reserve Bank of Chicago President Austan Goolsbee reiterated Monday in a television interview he sees a case for extensive central bank rate cuts given where the economy is and is likely to go.

When it comes to monetary policy, "this is a process over a year or more that we're trying to get the rates down to normal," Goolsbee said in a Fox Business news interview. As for the pace and ultimate scope of rate cuts, the federal funds target rate has "got to come down a lot more than 25 basis points over the next 12 months--It's going to be a lot of cuts," and the most recent set of central bank forecasts show policymakers are on board with that outlook, Goolsbee said. (Reporting by Michael S. Derby)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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