Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said the US labor market is steady and that the inflation side of the Federal Reserve's job is the more important one at the moment. He made the remarks in an interview with Fox Business Network.

The Fed operates under a dual mandate from Congress — maximum employment and price stability — and anchors that second goal to 2% inflation over the longer run. Its rate-setting Federal Open Market Committee adjusts the federal funds rate to keep the two sides in balance, and changes in that rate filter through to borrowing costs for households and businesses.

On the policy outlook, he signaled that no option is off the table ahead of the Fed's next meeting:

• The labor market is steady.
• The inflation side of the Fed's job is more important.
• There is plenty of room for anything on the table as far as a rate hike or a pause.
• He is open to seeing whether evidence shows inflation heading back to the Fed's 2% target.
• He will not rule out any decision at the next meeting.

The comments follow a more forceful warning earlier in the week. On September 29, Goolsbee called five and a half years of above-target inflation "playing with fire" and questioned the logic of looking through supply shocks. He also highlighted refinery capacity as a deeper problem even if crude prices fall quickly, meaning lower crude could provide some relief without fully resolving pressure on gasoline and diesel prices.

Ahead of the Fed's next meeting, the concrete markers to follow are the inflation readings themselves — whether they show price growth moving back toward the 2% target — and the decision the FOMC announces, which Goolsbee said remains open in either direction.

Analysis: Goolsbee is keeping both a rate hike and a pause on the table, with inflation his main concern. Describing the labor market as steady suggests he sees room to focus on bringing inflation down. He is willing to assess evidence of progress toward 2%, but the comments do not signal that another hike has been taken off the table. A pause would give the Fed time to evaluate that progress and would not necessarily mean the inflation battle is won. The tone leaves more room to wait for evidence, while the earlier remarks explain why he remains wary of assuming inflation will come down on its own — suggesting flexibility on the next decision, with inflation still driving the discussion.

Source: Fed's Goolsbee: Labor market is steady, inflation side of Fed's job is more important — ForexLive