As the Federal Reserve weighs its next move in an economy showing both strength and stubborn inflation, Chicago Fed President Austan Goolsbee has signaled renewed caution on rate cuts. Goolsbee said he remains undecided about backing another rate reduction in December, citing concerns that inflation remains trending the wrong way. His comments underscore a growing divide within the Fed over the timing of future cuts, as policymakers balance inflation control with the need to sustain growth.
Goolsbee, a voting member of the Federal Open Market Committee (FOMC), emphasized that his threshold for supporting another rate cut is now “a little bit higher” than it was in previous meetings. Following two 2025 cuts that brought the benchmark range to 3.75%–4.00%, he suggested that further easing may risk reigniting inflationary pressures.
“I’m not decided going into the December meeting,” Goolsbee said. “We’ve had inflation above target for four and a half years, and it’s trending the wrong way.”
Recent data show core inflation at 3.6% annualized over the last three months with core services above 4%, far from the Fed’s 2% goal. Goolsbee warned that “front-loading cuts” could send the wrong signal, especially given limited data released during the ongoing government shutdown.
He added that future rate reductions should move in tandem with inflation moderation, describing it as “most judicious to have the rates come down with inflation.”
Data Gaps: “Flying Blind” Amid the Government Shutdown
The partial federal government shutdown has complicated the Fed’s analytical picture. Key reports, including nonfarm payrolls and CPI data, have been delayed, leaving policymakers with fewer indicators ahead of the December FOMC meeting. Goolsbee admitted that this lack of data effectively leaves the central bank “flying blind.”
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