Fed official: Central financial institution needs to be ‘cautious’ in wake of banking turmoil

Fed official: Central bank should be 'cautious' in wake of banking turmoil



The banking crisis could help the Federal Reserve’s fight to bring down inflation, but the central bank needs to be “cautious” in its actions moving forward, Chicago Fed President Austan Goolsbee said Tuesday.

Goolsbee, the newest Fed appointee, spoke before the Economic Club of Chicago and addressed the “new, big, hairy elephant in the room” that was the recent failure of two regional banks, Silicon Valley Bank and Signature Bank, and subsequent market turmoil.

“At moments of financial stress like this, the right monetary policy is really caution and watchfulness and prudence,” he said. “And I don’t say that because I think we should stop prioritizing the fight against inflation just because markets got upset.”

But instead of financial issues trumping monetary policy concerns, financial conditions should certainly be included in…