Goolsbee says it's too soon to determine when Fed will cut interest rates

By Jeffry Bartash

Chicago Fed chief hails 'progress' on inflation

Chicago Federal Reserve President Austan Goolsbee on Friday declined to say when he thinks the central bank will cut interest rates, but he said reductions could be expected this year "if we continue to make surprising progress on inflation."

"We don't want to commit ourselves before the job is done," Goolsbee said in an interview on CNBC. But "as inflation comes down, that opens the door to a reduction in restrictiveness."

The central bank jacked up a key short-term rate to a top end of 5.5% from near zero in a 16-month period from March 2022 to July 2023 in an effort to slow the economy, cool off the labor market and restrain inflation.

The Fed stopped raising interest rates last summer as inflation decelerated sharply. The rate of inflation has slowed to around 3% from a 40-year peak peak of 9.1% in 2022, based on the consumer-price index.

The Fed is aiming to restore inflation to prepandemic levels of 2% a year.

Wall Street widely expects the Fed's next move to be a rate cut, perhaps as early as the spring.

Top Fed officials, however, have cautioned that spring will likely be too soon.

Read: Fed's Bostic makes case for first rate cut in July-September quarter

And: Fed's Waller sees interest-rate cuts this year, but nothing 'rushed'

Also: Fed's Mester says March is probably too early for rate cut

Top Fed officials meet again at the end of January to re-evaluate the economy. A premeeting blackout period is about to start, during which senior officials do not comment publicly.

-Jeffry Bartash

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01-19-24 0909ET

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