Chicago Fed President Austan Goolsbee said the Fed should avoid moving too quickly on rate cuts, even as inflation has moderated from its highs. He warned that policymakers learned hard lessons from previously labeling inflation as “transitory” and must not underestimate persistence again.
While acknowledging progress, Goolsbee argued that cutting rates prematurely could jeopardize gains in price stability. He said it would be imprudent to front-load easing before there is firm confirmation that inflation is on a sustained path back to the 2% objective.
“Before we cut rates more to stimulate the economy, let’s be sure inflation is heading back to 2%,” emphasized.
He also rejected complacency around 3% inflation rate, stating it is “not good enough” and falls short of the Fed’s commitment. “Stalling out at 3% is not a safe place to be for a myriad of reasons we know all too well,” he added.
