Chicago Fed President Goolsbee: Inflation falling to 2% target should lead to rate cuts

ChainCatcher news, according to Jinshi Data, Chicago Fed President Goolsbee stated that if the U.S. inflation rate continues to fall to the 2% target, policymakers should cut interest rates. In an interview, he pointed out, "We are on the path to 2% inflation, and if we keep interest rates unchanged while inflation is declining, that is tightening, so a decision to cut rates should be made."

Before Goolsbee's remarks, the Fed's preferred inflation indicator—the May PCE data—rose only 0.1% month-on-month, the lowest level in six months. Goolsbee believes that although the unemployment rate remains low, there are warning signs in the job market, and inflation seems to be returning to target levels.

He also mentioned that the Fed has kept interest rates high since last July and will need to see more evidence that inflation is moving toward the 2% target before lowering borrowing costs. Goolsbee will briefly exercise his voting rights as the President of the Cleveland Fed at the July meeting.