Austan Goolsby, President and Chief Executive Officer of the Chicago Fed, speaks at the National Association for Business Economics (NABE) Economic Policy Conference on Tuesday, February 24, 2026 in Washington, DC.
Graham Sloan Bloomberg | Getty Images
Chicago Fed President Austan Goolsby said Tuesday that cutting interest rates is not appropriate until there is more evidence that inflation is trending down.
Recent indicators show that inflation is well off its highs but still above the Fed’s 2% target, Goolsby said, noting that policymakers “got burned by assuming temporary inflation” in the past and shouldn’t make the same mistake again.
“We feel it’s unwise to bring forward too many rate cuts in these circumstances,” he said in a speech at the National Association for Business Economics’ annual meeting in Washington, D.C. “People have expressed that prices are one of their most pressing concerns. Let’s be careful. Let’s make sure inflation is back to 2% before we cut rates further to stimulate the economy.”
The latest inflation data for December showed core inflation, which excludes volatile food and energy prices, as measured by the Fed’s main forecast indicator, the Consumer Expenditure Price Index, holding steady at 3%. This is up 0.2 percentage points from November, partly due to the impact of the tariffs, which is expected to be temporary, but also due to underlying pressures in service sectors and areas not directly affected by the tariffs.
Specifically, Goolsby said persistently high housing inflation is not due to tariffs and emphasized the need for the Fed to be “vigilant.”
Goolsby noted that 3% inflation is “not good enough. And it’s not what we promised when the Federal Reserve committed to its 2% target. Stagnating at 3% is not a safe place for myriad reasons that we all know well.” He previously said he believed the Fed could cut rates before the end of the year.
The comments come as markets expect the Federal Open Market Committee, on which Mr. Goldsby is a constituency this year, to be on hold until at least June, and possibly July. Futures traders see a 50-50 chance of a rate cut in June and about a 71% chance of a cut in July, according to CME Group’s FedWatch index. The Fed has cut interest rates by a quarter of a point three times in the second half of 2025.
Fed Governor Christopher Waller, an advocate of lower interest rates, also spoke at the NABE conference on Monday and took a more cautious approach.
Waller said he believes policymakers should “wait and see” the impact of tariffs, but said recent data suggests the labor market may be in better shape than previously shown, reducing the need for further cuts. If the employment situation continues to improve, the case for layoffs will further weaken, but he said he was not convinced that January’s non-farm payrolls numbers were “more noise than signal”.
Tuesday will be a busy day for Fed speakers, with Governor Lisa Cook scheduled to speak at NABE in the morning.
