Goolsbee says rates can come down, but pace depends on inflation

Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee acknowledged that interest rates are currently in restrictive territory, implying there may be room to move lower soon. However, Goolsbee pulled back from the cut-heavy brink shared by some other Fed policymakers, noting that the pace of interest rate cuts remains dependent on inflation figures.

Goolsbee's comments come as a follow-up to his observations earlier on Thursday that inflation appears to be going back up.

Key highlights

Frontloading rate cuts before it's clear inflation won't be persistent runs the risk of a mistake.
Labor market is largely stable with some mild cooling.
Pace of rate cuts will in large measure be determined by behavior of inflation.
I am still concerned about inflation, want to be vigilant.
Fed policy has been mildly, moderately restrictive.
When inflation is above target and rising, holding policy rate steady is cutting the real rate.
Comfortable with gradual rate cutting if we continue to make sure inflation is headed to 2%.
Still relatively optimistic that tariffs won't drive up inflation broadly, and rates can come down.
Fed's recent 25 bps cut was perfectly appropriate; fed projections aren't rate-path guidance.
If rates were excessively restrictive, would expect to see drag on business investment, which has been surprisingly strong.
Normally would think that a drop in immigration would push up on inflation.
Fed president reappointments have always been based on merits, expect no change on that this round.
Everyone at FOMC table takes their jobs seriously, it's not driven by politics.
Chicago Fed's new labor market measures are not a vote of no-confidence in bls; love the bls data.