MNI BRIEF: Fed's Goolsbee Wants To Ensure Inflation Comes Down

Federal Reserve Bank of Chicago President Austan Goolsbee said Thursday he is uncomfortable lowering interest rates too far before seeing evidence that tariff-related inflation is transitory and is not spilling over into services.

“My unease is about the short-run frontloading of too many rate cuts, counting on the inflation uptick that we’ve seen being transitory,” he told reporters during a virtual briefing. 

“We’ve been above the target for 4.5 years, and the last three months are at best steady at 3%. There are some measures by which the last three months look like they’ve gotten a little worse,” Goolsbee said about the inflation outlook, adding he’s especially concerned about an uptick in service sector price pressures. “We would want to see that there’s some relief in that.” (See: MNI INTERVIEW: High Bar For More Cuts As Neutral Nears-Kaplan)

A voter in this year’s FOMC, Goolsbee appears to be leaning against a December rate cut and reporters asked repeatedly whether he would dissent. 

“I do think there is some value to the Powell approach (of), can we build a consensus that everyone can agree with, but if I end up feeling strongly one way and it’s different from what everybody else thinks, then that’s what it is," he said.

Goolsbee described the U.S. job market as having cooled but remaining largely stable despite a recent report showing a rise in the September jobless rate to 4.4% from 4.3%. “I don’t think this jobs number adjusts our view. The new unemployment claims certainly do not seem to suggest that there’s a rapidly deteriorating labor market.”