Goolsbee of Chicago Fed Says "Several Rate Cuts Possible This Year...Cautious Approach Needed"

"Evidence of Declining Inflation Needed"

Goolsbee Austan, President of the Federal Reserve Bank of Chicago, being interviewed by Fox Business on the 26th (local time). Fox Business capture

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said on the 26th (local time) that while there is a possibility of several benchmark interest rate cuts this year, a cautious approach is necessary.

In an interview with Fox News that day, President Goolsbee said, "I am reasonably confident that rates could go down a few more times this year." He explained that within the Federal Reserve (Fed), he is among those who are relatively optimistic about rate cuts this year.

President Goolsbee, however, stressed that rate cuts must be approached carefully, as they could lead to an overheated economy. He said he does not want to bring forward rate cuts excessively until there is actual evidence that inflation is declining toward the Fed's 2% target.

Expectations for early rate cuts in the United States have cooled somewhat due to optimistic economic prospects. Earlier in the year, markets had grown more confident that the Fed would accelerate the pace of rate cuts after U.S. President Donald Trump nominated Kevin Warsh as the next Fed chair.

In a U.S. economic outlook report released on the 25th, the International Monetary Fund (IMF) noted that it expects U.S. economic growth this year to rise to 2.4% from 2.2% last year, that the unemployment rate will remain around 4%, and that inflation will gradually decline. Given this situation, observers believe the Fed will have limited room to cut rates. The IMF projected the U.S. policy rate at the end of the year to be in a range of 3.25% to 3.5% per annum, compared with the current benchmark rate of 3.50% to 3.75%.

Meanwhile, the Fed’s next Federal Open Market Committee (FOMC) meeting is scheduled for the 17th to 18th of next month. Reuters reported that the benchmark interest rate is expected to be kept unchanged in a range of 3.50% to 3.75% at the upcoming meeting.

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