U.S. Fed's Balancing Act: Monitoring Economy to Sidestep Recession

Chicago Federal Reserve President Austan Goolsbee emphasized the need for careful economic oversight to avoid over-tightening interest rates, despite weaker-than-expected jobs data. In an interview with CNBC, Goolsbee noted that current data does not indicate economic overheating, thus warranting a forward-looking perspective on economic decisions.

Goolsbee also warned against placing too much weight on the recent global stock market sell-off, driven by the Bank of Japan's rate hike and geopolitical tensions in the Middle East. He stressed that the Fed's mandate focuses on employment and price stability, not stock market performance.

The discussion comes as new U.S. services sector data showed a rebound, providing a glimmer of optimism amidst market turmoil. Additionally, Goolsbee highlighted that the Fed's response would be contingent on two factors: the materialization of downside risks to the economy and whether the market sell-off triggers broader financial instability.

(With inputs from agencies.)