Fed needs to safeguard against labor market weakening further, says Goolsbee

The Federal Reserve needs to lower interest rates in order to keep the labor market healthy and multiple cuts will be required, Chicago Fed President Austan Goolsbee said on Friday.

"Every month...inflation comes in low, we just tightened and do you want to tighten when the job market is cooling that much?," Goolsbee said in an interview with broadcaster CNBC.

"I think it raises some serious questions, not just about this meeting but about the next several months. How do we make sure...to not have things turn into something worse, that's the critical challenge facing the Fed in my view."

US employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested the labor market was slowing rather than deteriorating rapidly.

Goolsbee added he sees a series of rate cuts ahead. “I do basically think...in past cycles when things slow down the conditions warrant multiple moves, not just a single one.”