Fed’s Goolsbee sees room for rate cuts if inflation cools

Investing.com -- Federal Reserve Bank of Chicago President Austan Goolsbee said Tuesday that interest rates could be reduced if inflation continues to cool down.

"I think eventually, at a gradual pace, rates can come down a fair amount if we can get this stagflationary dust out of the air," Goolsbee told CNBC in an interview.

Goolsbee suggested that a neutral rate would be approximately 100 to 125 basis points lower than the current target range of 4% to 4.25%. He added that "ultimately the rate might settle around 3% with inflation at 2% and I’m comfortable with that as a marker."

The Chicago Fed president emphasized that the central bank has not changed its inflation target, stating firmly, "We have to get inflation to 2%, period." He warned that "anyone saying we’re raising the inflation target, that’s dangerous talk."

Regarding the current monetary policy stance, Goolsbee described it as "mildly restrictive" and cautioned about aggressive policy moves, saying, "We need to be a bit careful about getting aggressive."

Goolsbee also commented on labor market conditions, noting that "the labor market continues to cool at a mild, modest pace" and characterized the current situation as a "low-hiring, low lay-off market." He added that "the supply side of labor is moving all around with immigration."

He stressed the importance of central bank independence, stating it is "critically important that we maintain monetary independence."

You May Also Be Interested In

• Apple suing OpenAI over alleged misappropriation of trade secrets
• Discovery Energy Metals plans private placement of up to $1.25M
• Prabhudas Lilladher Reiterates Hold (3) Rating on Avenue Supermarts (DMART:IN)