Fed Official Says Central Bank Prepared to Step In With Emergency Measures If Economy Deteriorates Sharply

A senior Federal Reserve official said Monday that the U.S. central bank is prepared to step in with emergency rate cuts if the economy takes a sharp downturn, although he suggested that markets were overreacting amid Monday’s stock sell-off. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told CNBC’s “Squawk Box” on Aug. 5 that as inflation has come down, the effective federal funds rate is as high as it has been in a long time, while hinting that monetary policy may now be too restrictive. “We’ve been in a restrictive posture at the Fed,” Goolsbee said. “And you only want to be that restrictive if you think there’s fear of overheating. And that these data, to me, do not look like overheating.”...