Federal Reserve Bank of Chicago President Austan Goolsbee said on Tuesday that the central bank may be able to implement "several more" rate reductions in 2026, provided inflation continues to move toward the Fed's 2% objective.
Speaking in an interview on CNBC, Goolsbee urged caution about interpreting a recent weak consumer price report as proof of durable disinflation. He said headline inflation was in part depressed by base effects, and he warned that services inflation remains "not tame."
"If we can show that we’re on path to 2% inflation, I still think there’s several more rate cuts that can happen in 2026," Goolsbee said. "But we’ve got to see it" in incoming economic data, he added, emphasizing that policymakers are seeking evidence that price pressures are sustainably easing before moving forward with additional easing steps.
Goolsbee also pointed to differences across sectors of the consumer price index, saying goods with higher tariffed content have tended to register larger price increases. On the broader question of where neutral policy might sit, he described a policy rate of 3% as a "loose" estimate of the neutral rate.
The Chicago Fed president reiterated that the Fed wants clear confirmation from economic readings that inflation is on track to the 2% goal before enacting further cuts, framing prospective easing as conditional on data rather than pre-committed policy.
On the matter of leadership at the Fed, Goolsbee expressed his support for President Biden's nominee for Fed chair, Kevin Warsh, saying he has known Warsh for many years and is a "big fan" based on their work together during the Great Financial Crisis.
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