Chicago Fed President Austin Goolsby called for caution in lowering interest rates.
He said the current pace of inflation was not sufficient to justify further monetary easing at this time.
“A rate cut is not appropriate until there is stronger evidence that inflation is on a steady downward trend,” Goolsby said in a speech at the National Association for Business Economics’ annual meeting in Washington. This is according to a report published by American network CNBC and reviewed by Al Arabiya Business.
federal goals
Goolsby said recent indicators show inflation has fallen from its peak, but remains above the Fed’s 2% target.
He noted that monetary policymakers have been fooled by temporary inflation before and should not repeat the same mistake. He added: “People consider prices to be one of the most pressing issues in their daily lives and we have to pay attention to that. We have to make sure that inflation is returning to 2% before we cut interest rates to stimulate the economy.”
He said high housing inflation had nothing to do with tariffs and stressed the need for the central bank to remain “vigilant.”
market contract
“3% inflation is not enough, it’s not what the Federal Reserve promised when they committed to reaching their 2% goal, and it’s not a safe situation to stay at this level,” Goolsby said. However, he said there was a possibility that interest rates could be lowered by the end of the year.
Goolsby’s comments come as markets expect the Fed to keep interest rates on hold until at least June next year, with an increased chance of a rate cut in July, according to futures market estimates.
The US Federal Reserve (Fed) had cut interest rates by a quarter of a percentage point three times in the second half of 2025.
Chicago Fed President Austan Goolsby called for caution in lowering interest rates.
He said the current pace of inflation is not sufficient to justify further monetary easing at this time.
“A rate cut is not appropriate until there are stronger signs that inflation is steadily declining,” Goldsby said in a speech at the National Association for Business Economics’ annual meeting in Washington. This is according to a report published by the American network “CNBC” and reviewed by “Al Arabiya Business”.
Fed goals
Mr. Goolsby explained that while recent indicators show that inflation has fallen from its peak, it remains above the Federal Reserve’s 2% target.
He noted that policymakers have been fooled by temporary inflation before and should not repeat the same mistake. “People consider prices to be one of the most pressing issues in their daily lives, and we have to pay attention to that. We need to make sure that inflation is returning to 2% before we cut rates to stimulate the economy,” he added.
He said high housing inflation was unrelated to tariffs and stressed the need for the central bank to remain “vigilant.”
market contract
“3% inflation is not enough, it’s not what the Fed promised when they set the 2% target, and it’s not a safe situation to stay at this level,” Goolsby said. Still, he suggested a rate cut could be possible this year.
Mr. Goolsby’s comments come as markets expect the Fed to keep interest rates on hold until at least June, with futures market predictions increasing the likelihood of a rate cut in July.
The US Federal Reserve (Fed) had cut interest rates by a quarter of a percentage point three times in the second half of 2025.
