Chicago Fed President Goolsbee Signals Rate Cuts Dependent on Inflation Progress
Chicago, IL — March 21, 2025 — Chicago Federal Reserve President Austan Goolsbee suggested this week that interest rate cuts could be on the table in the near future, depending on the trajectory of inflation in the coming months. Goolsbee, known for his cautious and data-driven approach, indicated that while inflation remains a top priority for the Federal Reserve, there is potential for a policy shift if inflation continues to ease.
In remarks made during a speech at a local economic conference, Goolsbee emphasized that while the central bank has been committed to combating inflation through a series of rate hikes, any future decisions regarding rate cuts will be contingent upon sustained progress in bringing inflation down to the Fed’s target of 2%.
“We are not there yet,” Goolsbee said. “But if inflation continues to show consistent improvement and approaches our target over time, the case for lowering rates becomes stronger. We need to ensure that inflation is well and truly on a downward path before making such a move.”
Since the beginning of the rate hike cycle in 2021, the Fed has aggressively raised interest rates to curb inflation, which soared to multi-decade highs in the aftermath of the COVID-19 pandemic. The central bank’s moves have had significant implications for borrowing costs, consumer spending, and business investment. However, inflation has shown signs of slowing in recent months, prompting market watchers to speculate about the possibility of a pivot in monetary policy.
While the overall inflation rate has fallen from its peak in 2022, core inflation, which excludes volatile food and energy prices, remains stubbornly high in certain sectors. Goolsbee acknowledged that the process of reining in inflation is complex and that the Fed’s actions must remain data-dependent.
“We’re seeing some positive movement in inflation data, but there are still areas where price pressures persist,” Goolsbee explained. “It’s important not to overreact to any one set of numbers. We must be cautious in how we approach future rate cuts to ensure we don’t disrupt the progress we’ve made so far.”
Goolsbee’s comments come as the Fed faces increasing pressure from various sectors of the economy. On one hand, businesses and consumers are feeling the strain of higher borrowing costs, and some industry groups are urging the Fed to consider rate cuts sooner rather than later. On the other hand, some economists are concerned that cutting rates too soon could risk reigniting inflationary pressures.
The Chicago Fed President also emphasized that any decision on rate cuts will be made in collaboration with his colleagues on the Federal Open Market Committee (FOMC). “Monetary policy is a collective decision,” he noted, “and we’ll continue to take a careful, consensus-driven approach to ensure that we’re doing everything we can to foster stable prices and maximum employment.”
As inflation continues to be a key concern for both the Fed and consumers, all eyes will be on upcoming economic data releases, as well as the central bank’s next policy meeting. If the inflation trend continues to show positive signs, Goolsbee’s suggestion of potential rate cuts could gain traction, marking a shift in the Fed’s approach after years of tightening monetary policy.
For now, Goolsbee and other Fed officials will remain focused on inflation data and economic indicators, while remaining open to adjusting policy as needed in the months ahead.
By: satish mehra | Financial News Correspondent
