The miracle of modern telecommunications. I'm in Boston, where I did talk with Susan Collins earlier today, and Austin is in Chicago, where he is making some of the media rounds. Austin, thanks for joining us today. You saw her get you out here to Chicago.
Exactly. But you just heard them say that the markets are down today. There's a little bit of disappointment because there's a feeling that with reasonably strong inflation and kind of strong economy and mixed news on the labor markets that the Fed might take a Santa pause, take a pause in December. Do you want to make everybody happy and tell them that that's not going to happen?
Look, you know, my thing is, A, I'm only allowed to speak for myself, not for anybody else on the committee or for the committee as a whole. And B, I don't like tying our hands. We're going to still get a lot of information and data before the next meeting when we have to decide that and we're going to get to discuss amongst ourselves. And I'm going to hear the views of other folks on the committee. I know the market's business model is to react immediately and in the most extreme terms to rumors. And that's not the Fed timetable. What we need to do as the central bank, I think, is focus on the through line. And the through line has been substantial decrease in the inflation rate from its highs, the job market cooling to something like full employment, where if it stayed right where it was, that would be a perfectly fine, steady state outcome. And to do that and hold it in that kind of position, I think we're going to be looking at rates coming down over the next year along the lines of what the dot plot said. So I still think we have a long way to go down with rates, how fast that happens. You saw Chair Powell saying that there's nothing that says it has to be immediate. And I'm comfortable personally that as there's some dispute about what is the neutral rate at which we're going to settle down. If there's disagreement about that, that we don't just charge right to it, that we slow the pace as we get toward it. But again, this is playing out over a longer period, I think.
Well, everybody came out of the last meeting. Everybody on Wall Street came out of the last meeting, figuring that the December meeting was a sure thing for another rate cut. Have you seen anything in the data we got this past week that seems to have upset people on Wall Street? That would cause you to think there should be a pause? Or are you still fairly confident that it's a necessary and possible move?
Well, the second part of that, I always think you've seen the table is a huge table. Everything's always on the table. But there's no guarantees and there shouldn't be. We should be watching the conditions. I'm not going to try to put my head. It's a. How dangerous is it to try to put your head into what the market is thinking? I've really just got to focus on what I'm thinking.
We've seen what is Austin in the job market?
Conflicting crosswinds, let's call it. We had a disappointing month. We had two stronger than expected months. Then we had a hurricane and strike noise affected month that was well below what was expected. We just need to see through that and try to figure out where we are in the job market. A lot of the other measures, if you take the unemployment rate, if you take some of the ratios like vacancies to the number of unemployed workers, they're pointing to stabilization at something like full employment. That would be great. The inflation numbers have to keep improving. I believe that we have set out a path to 2%. If we started to see reversal of that, then we're going to be back into the phase where we got to figure out, is this a bump in the road like it was in January of this year, or is this through line continuing?
And that what you're seeing right now, a lot changed in the last couple of weeks on that? Is that what you're seeing now with inflation as a bump in the road, the CPI pie and what the nerds have figured out for coming up?
Well, the nerds. I love those nerds. Yeah. A bunch of those nerds work at Chicago Fed. It's a little higher on a monthly basis than the target. If that was extended, that's too high. We're not the inflation target's 2%. We're going to get inflation at 2% if it's coming in at 3%. It has to come down. Now, that said, absolutely don't make too much out of any one month's number, especially on inflation. There's a lot of volatility of that series. And we've had many months in a row that the through line on inflation, in my view, is it's come way down. It's going to keep coming down. I have some confidence that if you break out the components, you're starting to finally see progress. On the housing side, we've had a bit of a bump slash blip where goods inflation has gone back up above zero, where pre-COVID it was mild deflation. So I still think you can see some progress on that. And we'll keep an eye on the services.
This morning, you were quoted as saying, by this time next year, we'll see interest rates far below where they are today. What is far below? I mean, is your view of neutral significantly lower than we are now?
Definitely. I mean, I don't think it's a secret. If you take the dot plot as a BS, it looks like a pretty wide consensus among the members of the committee where they're asked individually, we don't debate those points that almost everyone views that the long run settling rate of interest rates is somewhere well below where it is today. So that's why I say as long as we're staying on this path that we've been on, I view that interest rates need to come down a fair amount over the next 12 to 18 months.
But given the growth rate, Atlanta Fed GDP now out today 2.6%. And what we've seen the rest of this year, it's been stronger than anticipated. Inflation's a little higher than anticipated, unemployment a little lower than anticipated. Is it worth keeping your foot on the brake a little longer to try to ensure you get to that target you want?
