Chicago Fed’s Goolsbee says he’s cautious about further rate cuts during shutdown

Chicago Federal Reserve President Austan Goolsbee recently expressed reservations about further interest rate cuts due to the lack of key inflation data caused by the government shutdown. Despite his previous support for gradual rate reductions, Goolsbee highlighted concerns about the absence of crucial price reports, especially with a recent uptick in general inflation.

During a CNBC interview, Goolsbee emphasized the importance of monitoring inflation trends, cautioning against assuming that recent inflation spikes are merely transitory. He noted that deteriorating job market conditions would be more immediately evident compared to inflation issues, making him hesitant to advocate for front-loading rate cuts.

The Chicago Fed updated its labor market indicators dashboard, revealing a stable unemployment rate in October and consistent levels of hirings and layoffs. The unemployment rate indicator stood at 4.36% for the month, showing minimal change from the previous month. However, the Bureau of Labor Statistics postponed the release of the consumer price index report for October due to the shutdown.

Goolsbee expressed unease over the lack of inflation reports, citing a 3.6% annualized pace of core inflation before the shutdown. He emphasized the need for caution and vigilance in the current economic climate, advocating for a measured approach to rate adjustments.

As a voting member of the Federal Open Market Committee, Goolsbee will participate in the upcoming December meeting to decide on potential rate cuts. However, he is set to become an alternate member in 2026 before resuming a voting role in 2027.

The uncertainty surrounding inflation data and the potential impact on monetary policy underscores the challenges faced by central bankers in navigating economic uncertainties. Goolsbee’s cautious stance reflects the delicate balance required in managing interest rates amidst evolving market conditions.