On yesterday’s show I speculated on some of the reasons why the Fed might have pivoted. These reasons all sounded pretty plausible. Then I listened to an interview with Chicago Fed President Austan Goolsbee, who was on the Fed’s rate-setting committee this year. He spoke with the WSJ’s Take On the Week podcast host to discuss why “all things are on the table” when it comes to interest rates, including potential rate hikes, and why he thinks there is still a risk of recession. Plus: what’s keeping him up at night, and why he says it may be time for the Fed to shift its focus from inflation to the slowing U.S. labor market.

Naturally, Austan Goolsbee was careful not to make any predictions. But he did provide some meaningful insights as to why the change of heart at the Fed. He was asked about the spectrum of opinions across the members of the Fed. While all of the FOMC board members and all of the regional bank presidents have a voice at the table,  not all members have a vote. There is a rotating voting structure where each board member serves a term on the rate setting committee. 

In retrospect, I totally missed what was an obvious reason for the change. 

The Fed is well known for relying on the so-called Phillips curve as one of the core financial models when it comes to understanding the economy.