Federal Reserve (Fed) Reserve Bank of Chicago President Austan Goolsbee said that he is optimistic about more interest rate cuts this year, but not until inflation is heading back to target. He also added that Inflation progress has stopped, but it needs to make more progress, in remarks before the National Association for Business Economics in Washington, D.C., on Tuesday.

Key takeaways

Optimistic there can be more rate cuts this year, but not until inflation is heading back to target.
Before we cut rates more to stimulate the economy, let's be sure inflation is heading back to 2%
Can’t bank on coming productivity to lower inflation or use that as a rationale for rate cuts.

Inflation progress has stopped, not obvious that Fed policy is even restrictive.

Need to make more progress on inflation, concerned if it remains stuck above target.

Core services inflation ex housing is stubbornly high, need to be vigilant.

Lowering rates in anticipation of productivity gains could lead to overheating.

Consumer spending, not AI investment, has been the main driver of economic growth.

Low hiring, low firing fueled by uncertainty that looks set to continue with Supreme Court tariff ruling.

Economic growth, labor market don’t seem especially fragile.

Any discussion of returning to a scarce reserves regime would need to look at the pros and cons."