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Fed members warn of slowdown in employment, support cut

Chicago Fed President Austan Goolsbee said economic data justifies multiple rate cuts soon.

Chicago Fed President Austan Goolsbee said the long-term trend in U.S. labor market and inflation data justifies easing monetary policy steadily over the next year.

In an exclusive interview with MarketWatch on Thursday, Goolsbee said inflation has slowed “very significantly,” while unemployment has risen even faster. Noting that the data is coming in more positively on the inflation side and more negatively on the unemployment side, Goolsbee predicted that the path points not only to interest rate cuts in the near future, but also to multiple rate cuts over the next 12 months.

San Francisco Fed President Mary Daly also said she did not think the July employment report was a sign of weakening in the labor market, but said further slowdowns would be “unwelcome.” “This tightening cycle is over and will soon ease,” Daly said, adding, “It’s not clear how fast we can go down now.”

Hedge fund billionaire John Paulson said the Fed waited too long to start the easing cycle and predicted it would cut rates to 2.5% by the end of 2025.