By Ann Saphir
(Reuters) -Austan Goolsbee, a former economic advisor to the Obama White House, will take over as the president of the Federal Reserve Bank of Chicago when its current chief Charles Evans exits in January under the central bank’s age-based mandatory retirement rules.
Goolsbee, 53, chaired the Council of Economic Advisors under Democratic President Barack Obama.
A University of Chicago Booth School of Business economist, he helped develop an index of online inflation, and in his new role will vote on the Fed’s interest-rate-setting panel next year as the central bank continues to wage its toughest battle with inflation in 40 years.
In recent months Goolsbee has been among economists warning that aggressive Fed action could trigger a downturn, particularly when supply constraints are such a big factor behind inflation pressures.
Raising interest rates in big chunks is appropriate if high inflation is being driven by too much demand, “but not if you think, ‘hey wait a minute, the Fed can’t pump oil and the Fed can’t get rid of long COVID and make those people come back to work, all it can do is generate a stagflation,” he said in an interview in October.
“The Fed is raising rates as fast really as it has ever raised them, so the chance of recession is pretty good.”
At the same time, Goolsbee has said he believes the Fed will in fact continue to increase interest rates, telling Bloomberg Radio in late October that a 5% policy rate “kind of makes sense to me” to get inflation, and inflation expectations, under control.
THE TENTH MAN
Goolsbee was selected after an “expansive national search process” that identified a diverse group of candidates from a range of backgrounds, and is himself an “outspoken supporter of expanding diversity in the economics profession,” the bank said in a statement.
The pick of a white male for the job – the tenth in the Chicago Fed’s history – drew criticism from Democratic Senator Bob Menendez, who has pushed for more diversity among Fed policymakers and called the decision a “slap in the face” to Latinos.
“It is truly unacceptable that the Federal Reserve System continues to have an opaque, antiquated leadership selection process that lacks transparency and disadvantages diverse candidates,” he said.
Fed policymakers have become much more diverse in recent years, including two Black economists nominated by U.S. President Joe Biden who joined the Washington-based Fed Board earlier this year. Five of the 12 regional Fed banks are currently run by women, including two hired this year.
In his new role Goolsbee will be CEO of the Chicago Fed, a quasi-public institution owned by member banks and overseen by a board of directors picked by the banks and by the Fed Board of Governors.
He will also help set monetary policy as one of 19 Fed policymakers – 12 regional bank presidents and seven Fed governors – combing through data like the monthly jobs report to be released Friday to help gauge the state of the economy and guide decisions on the appropriate setting of interest rates.
Goolsbee is a prolific poster on Twitter, sharing everything from heartfelt personal commentary to hardnosed economic observations.
On Thursday he shared news of his new job with the comment: “a bit of a personal take on the forthcoming jobs numbers.”
In 2021 Chicago Fed paid Evans $464,000.
(Reporting by Ann Saphir with reporting by Michael S. Derby and Howard Schneider; Editing by Diane Craft and Andrea Ricci)