Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago, speaks at the National Association of Business Economics (NABE) Economic Policy Conference in Washington, DC, U.S., Tuesday, February 24, 2026.
Graeme Sloane | Bloomberg | Getty Images
Chicago Federal Reserve President Austan Goolsbee said Tuesday that interest rate cuts would not be appropriate until there was additional evidence that inflation was falling.
While recent indicators show inflation is well off its peaks but still above the Fed’s 2% target, Goolsbee noted that policymakers “have been burned assuming transitory inflation” in the past and should not make the same mistake.
“I think it’s not prudent to make rate cuts too early in these circumstances,” he told the National Association for Business Economics at its annual gathering in Washington, DC. “People are expressing that prices are one of their most pressing concerns. Let’s pay attention. Before we cut rates further to stimulate the economy, let’s make sure inflation returns to 2%.”
THE latest inflation dataa, for December, showed core inflation, which excludes volatile food and energy prices, of 3%, as measured by the Consumer Spending Price Index, the Fed’s main forecasting indicator. This represents an increase of 0.2 percentage points compared to November and is partly explained by the tariffs, considered temporary, but also by underlying pressures in the services sector and in areas not directly affected by the duties.
Specifically, Goolsbee said stubbornly high housing inflation was not driven by tariffs, emphasizing the need for the Fed to be “vigilant.”
Goolsbee noted that a 3% inflation rate “is not enough – and it’s not what we promised when the Federal Reserve committed to the 2% target.” Stopping at 3% is not a safe place for a myriad of reasons that we know all too well. He has previously said he believes the Fed will be able to cut interest rates later in the year.
The remarks come as markets expect the Federal Open Market Committee, of which Goolsbee is a constituent this year, to remain in limbo until at least June and likely until July. Futures traders estimate there is about a 50% chance for a decline in June and about a 71% chance for a decline in July, according to the CME Group. FedWatch gauge. The Fed adopted cuts of three-quarters of a percentage point at the end of 2025.
Fed Governor Christopher Waller, who has been pushing for lower rates, took a more measured approach Monday during his speech at the NABE conference.
Although Waller said he thinks policymakers should “look at” the impacts of the tariffs, he said recent data shows the labor market may be in better shape than previously indicated, mitigating the need for further cuts. If the jobs picture continues to improve, that would further reduce the case for cuts, although he is not convinced that January’s nonfarm payrolls data is not “more noise than signal.”
Tuesday will be an active day for Fed speakers, with Governor Lisa Cook also scheduled to present at NABE later in the morning.
