Fed’s Goolsbee: Avoid getting too aggressive with cuts upfront

Chicago Fed President Austan Goolsbee said he sees scope for interest rates to come down “a fair amount” over time if stagflation risks fade, though the adjustment should be “gradual”. Speaking to CNBC, he suggested neutral rate is 100–125bps below the current 4.00–4.25% range, implying a longer-run policy level around 3%.

Goolsbee stressed that inflation risks remain real, noting price growth has been above target for more than four years. He cautioned against being “overly upfront aggressive” with rate cuts despite growing confidence that inflation can ease back toward 2%.

At the same time, he highlighted that the labor market is cooling at a “mild to modest” pace, providing room for cautious policy adjustment.