There would be no need for analysts to pore over remarks<\/a> made by FOMC members between meetings looking for clues, or sit through the two nail-biting days during which the committee\u2019s 12 economists debate the state of the economy. They could simply sit back<\/a> and wait for the announcement.<\/p>\n Unfortunately, this scenario would also massively increase the odds of the committee making a grave error, according to Austen Goolsbee, president of the Federal Reserve Bank of Chicago and member of the FOMC.<\/p>\n Goolsbee took office in January 2023 and immediately became a voting member when the committee was under more scrutiny than ever.<\/p>\n Approaching the enormous table around which the group gathers to look at historic unemployment data, auto prices, and housing costs may seem daunting\u2014especially if you have to argue your point of view against the different opinions of others<\/a>.<\/p>\n But Goolsbee tells Fortune<\/em> he loves his job. Indeed hearing differences of judgement<\/a> from around that table \u201cisn\u2019t hard at all. It\u2019s great.\u201d<\/p>\n More importantly, Goolsbee believes this gamut of perspectives from around the States keeps the FOMC on track.<\/p>\n The US Federal Reserve<\/p>\n<\/div>\n \u201cI said as soon as I got there\u2014and nothing has changed in my observation\u2014that in the 21st century, I think the FOMC is the world\u2019s greatest deliberative body. No offense to the U.S. Senate or anything else,\u201d Goolsbee tells Fortune<\/em> in an exclusive interview.<\/p>\n \u201cHearing the different geographic perspectives and world views is super important. If we filled the committee with everybody who had the same background, from the same place and thought the same thing, I think the chance that the FOMC would make a terrible error goes way up.\u201d<\/p>\n Even critics of the Jerome Powell-led FOMC might be forced to admit that, since the COVID crisis, the FOMC has avoided making any cataclysmic errors. <\/p>\n For months the question on analysts\u2019 lips was: \u201cWill Powell land the plane?\u201d Will the Fed manage to wrangle rocketing inflation back down to its target of 2% without forcing the economy into a recession?<\/p>\n Some said it couldn\u2019t be done. <\/p>\n Former Treasury Secretary Larry Summers believed<\/a> that to bring inflation into the 2% range, unemployment would have to spike to 6% and the economy would have to shrink.<\/p>\n Others hoped for a soft landing\u2014JPMorgan CEO Jamie Dimon still believes the U.S. may suffer a harder landing<\/a>\u2014but so far the unemployment rate has stayed relatively steady around the 4.2% mark, while inflation has begun to wind its way down<\/a>.<\/p>\n And while a shaky jobs report at the start of the month will jangle the nerves of some FOMC members looking nervously at the second half of the committee\u2019s dual mandate\u2014bringing down inflation and maintaining maximum employment\u2014Goolsbee paints the meeting as a well-oiled machine<\/a>.<\/p>\n \u201cWe\u2019re pretty good, Chair Powell has been really impressive in his ability to corral a bunch of cats,\u201d Goolsbee adds. \u201cHe impressively builds consensus among some very different thinking folks.\u201d <\/p>\n Goolsbee, who was a member of President Obama\u2019s cabinet, is a proponent of ensuring the Fed is accountable to the public.<\/p>\n But this accountability does not equate to handing power to politicians over monetary policy, he says.<\/p>\n Drew Hallowell\u2014Getty Images<\/p>\n<\/div>\n Individuals such as vice president-hopeful JD Vance have framed the Fed\u2019s independence as being at odds with American democracy<\/a>. Speaking to CNN<\/a> in August he said: \u201cAgree or disagree, we should have America\u2019s elected leaders having input about the most important decisions confronting the country.<\/p>\n \u201cWhether the country goes to war, what our interest rates are, these are important questions that American democracy should have important answers for.\u201d <\/p>\n But public and politicians are two different entities with very different motivations. <\/p>\n Goolsbee said: \u201cCentral banks should be held accountable for their actions. And they are.\u00a0The evidence of what happened during the COVID times, in my view, [is that] there\u2019s a lot of public accountability on the central banks\u2014not just in the United States but everywhere\u2014and that\u2019s totally fine.\u201d<\/p>\n \u201cThat\u2019s a completely different issue than: \u2018Do elections drive monetary policy decisions?\u2019\u201d<\/p>\n While White House hopeful Kamala Harris has made it clear she has no interest<\/a> in meddling with the autonomy of the Fed, President Trump wants the FOMC to work more closely with politicians.<\/a><\/p>\n \u201cI think that, in my case, I made a lot of money. I was very successful,\u201d Trump said at a press conference this month at his Mar-a-Lago club in Palm Beach. \u201cAnd I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.\u201d<\/p>\n Chairman Powell has resoundingly knocked back any attempts to embroil the FOMC in political discourse. If history is anything to go by, Goolsbee says, combining central banks with central government has not worked out well.<\/p>\n \u201cThe independence is important,\u201d Goolsbee added. \u201cThe Federal Reserve Act is set up precisely so that the Fed\u2019s chair\u2019s term is not on an election cycle. It\u2019s not a normal political appointee.\u201d<\/p>\n \u201cThere\u2019s a federal election in the United States every two years: Is the Fed gonna not do its job every second year because there\u2019s an election?\u201d\u00a0<\/p>\n \u201cAll the Fed can do, and all the Fed does, is take the Federal Reserve Act\u2014which says you go look at maximizing employment and stabilizing prices and go base your decisions on that\u2014that\u2019s what we do.\u201d\u00a0<\/p>\n \u201cYou can read the minutes for yourself. The transcript will come out. You can read word for word what everyone says. It\u2019s not about elections, it\u2019s about economic conditions.\u201d<\/p>\n Wall Street, of course, has already placed its bets. It\u2019s expecting a long-awaited cut to the base rate in September,<\/a> which\u2014at 5.25%\u2014remains at a more than two-decade high.<\/p>\n While members of the FOMC can\u2019t speak specifically on when or by how much a base rate cut might occur, that doesn\u2019t stop experts searching for hints.<\/p>\n Andrew Harnik\/Getty Images<\/p>\n<\/div>\n The general consensus on among analysts is that a first Fed cut will come in September, with a reduction of 25 basis points, to 5%. This will be followed by another in December.<\/p>\n The likes of Goldman Sachs<\/a> expect a third in between, with the majority view agreeing that the Fed will bring the base rate back down to just over the 3% mark in 2025. <\/p>\n Goolsbee made no promises to those hankering for a cut<\/a>, though he acknowledged that the economy has shifted in 2024.<\/p>\n Inflation is seemingly headed in the right direction. In the 12 months through to July the CPI increased 2.9%<\/a>. While that is still above the 2% target, it was the smallest annual rise since March 2021.<\/p>\n \u201cThe conditions were very different when we set the rate at this level. Every month that we get an inflation like the one we just saw\u2014where inflation is lower than expected\u2014we just tightened in real terms,\u201d Goolsbee said. <\/p>\n \u201cIf you take the rate we were holding at while inflation goes down, we\u2019re getting tighter and tighter and you gotta be careful.\u201d<\/p>\n So Goolsbee is asking himself a question: When does the Fed really need to be that tight?<\/p>\n \u201cThe answer is you only want to be that tight for as long as you have to and if you\u2019re afraid that the economy is about to overheat,\u201d he explained. \u201cThis, to me, is not what an overheating economy looks like.<\/a>\u201c<\/p>\n \u201cSo I do think we need to be cognizant of being this tight for too long because if we are, we\u2019re going to have to think about the real side of the mandate and employment is gonna get worse.\u201d<\/p>\n<\/div>\n![\"The](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/08\/53201745228_e3e807b0ec_k_12803e.jpg?w=1440&q=75\"\/)
Public input, not politicians<\/h2>\n
![\"JD](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/08\/GettyImages-2165071369-e1723417702475.jpg?w=1440&q=75\"\/)
Where does that leave a September cut? <\/h2>\n
![\"Federal](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/08\/GettyImages-2164068247-e1724144059643.jpg?w=1440&q=75\"\/)