Federal Reserve Bank of Chicago President Austan Goolsbee on Monday expressed caution about further interest rate cuts, citing persistent inflation concerns that outweigh labor market risks.
Goolsbee indicated that the threshold for cutting rates is now higher than at the previous two Fed meetings. He believes interest rates should decline alongside inflation, stating that rates will eventually settle “a fair bit below current levels.”
While acknowledging that a “golden path” for the economy remains possible, Goolsbee expressed unease with frontloading rate cuts. He noted that timing monetary policy correctly during economic transitions is “very hard.”
On the labor market, Goolsbee described an unusual situation with both “low hiring” and “low firing” in the economy. He called the hiring rate “one of economy’s weakest factors” while stating that some key job market metrics have remained stable despite ongoing concerns.
Goolsbee characterized the broader economy as “pretty strong with weakness in specific sectors,” highlighting consumer spending as a key driver of economic momentum.