Home / Business and Economy / Goolsbee: Fed Can Cut Rates, But Inflation Isn't Ready
Goolsbee: Fed Can Cut Rates, But Inflation Isn't Ready
14 Feb
Summary
- US inflation remains stubbornly at 3%, not the target 2%.
- Federal Reserve President Goolsbee sees potential for further rate cuts.
- January's CPI data showed slower price increases, but services inflation is high.
Federal Reserve Bank of Chicago President Austan Goolsbee indicated that the US central bank possesses the capacity to implement additional interest rate reductions. However, he emphasized that such actions are contingent upon inflation returning to the Federal Reserve's 2% target, a condition not presently met. Goolsbee highlighted that inflation has stagnated around 3%, a level deemed unacceptable, and noted that recent data from January, while showing a muted overall price increase, still reveals concerning acceleration in services prices.
Recent market sentiment, influenced by slowing inflation indicators, has led to decreased Treasury yields, reaching year-to-date lows. Traders are now pricing in a greater likelihood of Fed rate cuts by year-end, with expectations of at least two reductions. Despite some encouraging signs in the consumer price index, the persistence of services inflation remains a key concern for policymakers like Goolsbee, tempering expectations for immediate aggressive rate cuts and maintaining a cautious approach to monetary policy.
