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Investing.com -- Chicago Federal Reserve President Austan Goolsbee expressed concern on Thursday about cutting interest rates too quickly, citing stalled progress on inflation and limited economic data due to the government shutdown.
Speaking to the Chartered Financial Analyst Society of Indianapolis, Goolsbee said he believes the underlying economy remains strong but is cautious about near-term monetary policy decisions.
"In my view, the underlying economy is pretty strong and eventually rates can come down a fair amount, but in the near term I’m a little uneasy front loading too many rate cuts, and counting on this will be transitory and inflation will go back down," Goolsbee stated.
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The Fed official emphasized the central bank’s commitment to its inflation target, saying, "For inflation, we’ve set a 2% target, and 3% inflation is too high. We made a sacred promise of 2% inflation."
Goolsbee noted that inflation appears to have "stalled" and may be moving in the wrong direction, causing him additional concern.
The lack of official economic data due to the government shutdown has compounded his unease. "Official data is a big mess, because the lights went out," he said, adding that this data gap makes him "more paranoid about the inflation side" since there’s less visibility into price pressures compared to labor market conditions.
On employment, Goolsbee acknowledged a "notable slowdown in number of jobs created" but said he is "dubious that slowdown in payrolls points to a recession." He characterized the current labor environment as one with "low hiring, low firing" that signals uncertainty.
Goolsbee maintained that the Fed’s role is to be "the steady hand" in guiding monetary policy through these uncertain conditions.