The Fed’s Goolsbee says he doesn’t like too many rate cuts
Chicago Federal Reserve President Austan Goolsbee on Friday explained why he voted against cutting interest rates this week, telling CNBC that policymakers should have waited until they had more information before making further cuts.
“I’m quite optimistic that 2026 rates will be able to be a little lower than they are today,” the central banker said during an interview with “Squawk Box.” “But I’ve just been uncomfortable with front-loading too many rate cuts and assuming that what we’ve seen in inflation is going to be temporary.”
Goolsbee was one of three members of the Federal Open Market Committee to vote against the quarter-percentage-point cut, the third consecutive easing measure. He was joined by Kansas City Fed President Jeffrey Schmid, as well as Governor Stephen Miran, who favored a steeper cut.
While he has said in the past that he sees room for further rate cuts, Goolsbee said the lack of progress on inflation speaks against the current move.
Recent data shows an annual inflation rate of around 2.8%, well above the Fed’s 2% target.
“There’s no way around the fact that we’ve been above the inflation target for four and a half years and the last six months haven’t shown any progress,” Goolsbee said. “Just before the lights went out (for the government shutdown), you saw some pretty worrisome data on services inflation. I just want to make sure that if we believe it’s temporary, we don’t put all our eggs there.”
“Although I voted to cut rates at the September and October meetings, I believe we should have waited to get more data, particularly on inflation, before cutting rates further,” the policymaker said in a post on the Chicago Fed’s website.
Goolsbee will not vote on the FOMC in 2026, but will still attend meetings.
“Given that inflation has been above our target for four and a half years, further progress on it has been suspended for several months, and almost all business and consumers we have spoken to in the district see prices as a major issue recently, I felt it would be more prudent to wait for more information.” wrote in a post on the Chicago Fed website.
In an interview with CNBC, he elaborated on his concerns about the cuts.
While other Fed officials expressed concern about a weakening labor market, Goolsbee said the data showed conditions were “fairly stable.”
“I’m pretty optimistic that for 2026, rates will be able to be a little lower than they are today. But I was just uncomfortable with cutting too much,” he said in an interview. “In my view, we’re not taking a lot of risk to just wait until Q1 2026 and make sure we’re back on track with 2% inflation.”
On Wednesday, the FOMC voted to cut its benchmark rate to a range between 3.5%-3.75%.
In his post-meeting press conference, Chairman Jerome Powell expressed concern that the labor market looked weaker than the headline numbers suggested, saying he expected official nonfarm payrolls numbers to decline and show losses in recent months.
Goolsbee said he is “one of the most optimistic people” that rates will be lower next year.
Schmid also released a statement Friday explaining his disapproval. He also voted against cutting rates in October.
“Inflation remains too high, the economy is showing continued momentum, and the labor market — while cooling — remains largely in balance,” Schmid said. “I view the current stance of monetary policy as only mildly, if at all, restrictive. With this assessment, I preferred to leave the target range for the monetary rate unchanged at this week’s meeting.”
Philadelphia Fed President Anna Paulson, who is up for election in 2026, said earlier Friday morning that she sees policy as “somewhat restrictive” and is more worried about unemployment than inflation.
Cleveland Fed President Beth Hammack also said, according to Reuters, that she would prefer policy to be “a bit more restrictive” to guard against higher inflation.
A total of six of the 19 Fed meeting attendees said they opposed tapering, although only two were voters.