The president of the Federal Reserve Bank of Chicago, Austan Goolsbee, was on Marketplace the other night, with a couple of exchanges worth passing along:
Ryssdal: ..what is your level of concern about overshooting, about keeping rates too high for too long?
Goolsbee: Look, it's definitely of some concern. We just came out of Thanksgiving season, Kai. And [former Federal Reserve Chair] Paul Volcker, my old mentor, was a great turkey cook, and he took a lot of pride in cooking his turkey. And the thing anybody who cooks a turkey knows is that you got to pull it out of the oven before it's to the point where you want it to be because it's going to have residual heat. And if you just keep cooking the thing for too long, they're gonna be like, "Mommy, why is Uncle Kai's turkey so hard to chew?" You know, so we definitely should think about that. We've been in restrictive territory because we've got to get inflation down. That's our sacred vow, and we're going to do it. Once you, once you believe that you are on the path to get inflation to target, then the amount of restrictiveness that you need to apply needs to be less...
Kai Ryssdal: I need you to decide on one piece of data you're looking at to foretell the future of this economy and also what you at the Fed might do.
Austan Goolsbee: Yikes, I say, of all the pieces that right now I'm looking at, what's happening to housing inflation is probably the most paramount one....the key component is going to be what happens to housing. And it's been making some progress. It's supposed to make more progress. But that's the forefront. That's not the only thing I'm looking at. But that's probably the most important in the immediate term.
(See also: "Apartment Rents Are Moderating. Will the Fed Notice?" from November 8.)