Fed member Austan Goolsbee said the cooling US job market should be closely monitored as inflation approaches the Fed’s 2% target.

Speaking to CNBC today, Goolsbee noted that with inflation appearing more controlled, attention should now turn to the other half of the Fed’s dual mandate: employment.

“As Chairman Powell said, we want to be vigilant in the labor market. We’re not just fighting inflation right now,” Goolsbee said.

He said inflation was showing signs of stabilizing, reducing the urgent need for further tightening. However, he declined to confirm whether he would support a rate cut at the upcoming September meeting, citing the importance of avoiding unnecessary tightening while the economy is not overheating.

Goolsbee noted that many labor market indicators are showing signs of cooling, but he said it’s unclear whether these trends represent a return to more normal conditions or a potential weakening of the labor market. “We’re getting warning signals from the labor market,” Goolsbee said, citing concerns about defaults and rising unemployment rates.

Goolsbee said he was confident the Fed’s rate cut forecast could come true, given that inflation has been declining while policy remains relatively tight. He noted that the current interest rate was set at a time when inflation was significantly higher, and that adjustments may be necessary.

*This is not investment advice.