Fed's Goolsbee hesitant on December rate cut amid inflation concerns

Investing.com -- 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.

"I’m not decided going into the December meeting," Goolsbee said Monday in a Yahoo Finance interview. "I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for four and a half years, and it’s trending the wrong way."

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.

You May Also Be Interested In