Chicago Fed President Austan Goolsby explained on Friday why he voted against cutting interest rates this week, telling CNBC that policymakers should have waited to further ease until more information was available.
“I’m quite optimistic that interest rates will be much lower in 2026 than they are now,” the central bank governor said in an interview with Squawk Box. “But I am uncomfortable with bringing forward too many rate cuts and assuming that the inflation we have seen so far is temporary.”
Mr. Goolsby was one of three members of the Federal Open Market Committee who voted against the quarterly percentage point cut, which would be the third consecutive stimulus package. He was joined by Kansas City Fed President Jeffrey Schmidt, as well as President Stephen Milan, who wants deeper rate cuts.
Mr. Goolsby has said in the past that there is room for interest rates to be lowered further, but said the lack of progress on inflation discouraged action now.
Recent statistics show the annual inflation rate is about 2.8%, well above the Fed’s 2% target.
“It’s inevitable that we’ve been above our inflation target for four-and-a-half years, but we haven’t seen any progress in the last six months,” Goldsby said. “Just before lights out [for the government shutdown]there were some relatively alarming readings about service inflation. However, if you believe this is only temporary, you don’t want to put all the eggs in. ”
“While I voted to cut rates at our September and October meetings, I think we should have waited for more data, especially on inflation, before cutting further,” the policymaker said in a post on the Chicago Fed’s website.
Mr. Goolsby will not be a voter in the 2026 FOMC meeting, but plans to continue attending meetings.
“Given that inflation has been above our target for four and a half years, and that further progress has been stalled for months, nearly every businessman and consumer I spoke to recently in the District acknowledged that prices were a major concern, and we felt that waiting for more information might have been the wiser choice,” he said in a post on the Chicago Fed’s website.
In an interview with CNBC, he detailed his concerns about the cuts.
While other Fed officials have expressed concern about a weakening labor market, Goolsby said the data shows the situation is “fairly stable.”
“I’m pretty optimistic that we’ll be able to get interest rates much lower in 2026 than they are now, but I’d be uncomfortable cutting rates too much too early,” he said in an interview. “In my opinion, we don’t take that extra risk of waiting until the first quarter of 2026 to ensure we’re back on track for 2% inflation.”
The FOMC voted on Wednesday to lower the policy interest rate to a range of 3.5% to 3.75%.
In a post-meeting news conference, Chairman Jerome Powell expressed concern that the labor market looked weaker than the headline numbers suggested and said he expected official nonfarm payrolls numbers to be lowered in recent months, resulting in a deficit.
Mr. Goolsby said he is “one of the most optimistic people” that interest rates will fall next year.
Schmidt also released a statement Friday explaining his opposition. He also voted against the October rate cut.
“Inflation remains too high, the economy continues to show momentum, and the labor market, although cooling, remains broadly balanced,” Schmidt said. “I view the current monetary policy stance as modestly restrictive, if any at all. Given this assessment, it was my hope that the target range for policy rates would remain unchanged at this week’s meeting.”
On Friday morning, Philadelphia Fed President Anna Paulson, who plans to vote in 2026, said she considered the policy “somewhat restrictive” and was more concerned about unemployment than inflation.
