Chicago Fed President Austan Goolsbee stated on Thursday that the latest Consumer Price Index (CPI) data "has a lot to like" and, if sustained, could pave the way for further rate cuts next year.
In an interview, Goolsbee said, "My view is that the neutral rate is somewhat lower than where we are now. By the end of next year, as long as we can keep inflation on track toward 2%, I think it’s realistic to expect significant rate cuts." Goolsbee was one of two officials who voted against a rate cut last week.
He noted that November was a "good month," with CPI data showing easing price pressures, but he cautioned against overemphasizing a single month’s data.
The delayed report, affected by the government shutdown, indicated moderating price pressures. However, economists remain cautious due to concerns about the report’s compilation, and the favorable shift does not necessarily signal a sustained decline in inflation, which remains well above the Fed’s 2% target.
In a statement, Goolsbee said, "I believe we should wait for more data, particularly on inflation, before considering further rate cuts." He added, "Waiting until the new year to discuss this issue doesn’t introduce much additional risk and provides the benefit of more recent economic data."
During Thursday’s interview, Goolsbee expressed discomfort with cutting rates prematurely before markets gain strong confidence in inflation returning to target levels. "We want to see progress" in reducing price pressures before easing further, he said.
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