Chicago Federal Reserve president Austan Goolsbee, speaking in an interview with CNBC on Friday, expressed confidence that the U.S. inflation is on track to reach the 2% target. He stated that he is comfortable with interest rates coming down in line with inflation, emphasizing the need to slow down and carefully navigate the path toward the neutral rate. According to Goolsbee, the neutral is a fair bit below where rates are now.
While he remains sceptical of relying solely on the 12-month inflation figure, Goolsbee highlighted that the three- and six-month inflation numbers have been pretty solid. The official noted that today's Personal Consumption Expenditures (PCE) report was largely in line with expectations, though the one-month core reading was slightly lower than anticipated.
Looking ahead, Goolsbee predicted that interest rates will be significantly lower within the next 12 to 18 months. He observed that the job market appears to have settled in around full employment and described the underlying economy as being on an excellent path.
Addressing concerns about potential inflationary pressures from trade policies, the boss of the Chicago Fed suggested that a one-time increase in tariffs is theoretically transitory and may not require a policy response. He concluded by affirming that inflation expectations remain firmly anchored as the Fed continues its efforts to bring inflation down to target.