Federal Reserve Bank of Chicago President Austan Goolsbee said last Sunday that it is too early to announce the Fed's victory in fighting inflation, and the decision to cut interest rates will be based on upcoming economic data.
"We have made significant progress in 2023, but I still warn everyone that this is not yet complete," he said in an interview. "Therefore, the data will drive changes in interest rates."
Gullsby has voting rights on the Federal Open Market Committee this year and has always been leaning towards the dovish side in the Federal Reserve's voting committee. He is more optimistic about the prospect of a soft landing for the US economy than most policymakers, praising the progress of inflation this year while pointing out that inflation is still far from reaching the Federal Reserve's target of 2%.
"We must bring inflation down to the target level," he said on Sunday. "Any statement is exaggerated until we are confident that we are achieving this goal."
According to the latest meeting resolution of the Federal Reserve, policymakers held interest rates unchanged for the third consecutive time on December 13th. In the interest rate matrix chart released at the same time, the median predicted interest rate suggests that they expect to cut interest rates three times next year.
Federal Reserve Chairman Powell also stated at a press conference after the interest rate meeting last week that officials discussed the topic of interest rate cuts, which triggered a sustained rebound in the market. The stock market hit a new high, bond yields plummeted, and investors expect the rate cut next year to exceed previous expectations.
In light of this, two Federal Reserve officials attempted to ease market expectations last Friday, stating that it was too early for decision-makers to consider lowering borrowing costs now.
"We are not really talking about interest rate cuts," New York Federal Reserve Bank President Williams said in a recent interview, stating that comments about the March rate cut were "too early.".
However, Gullsby did not rule out the possibility of a rate cut in March last Friday. He said that risks are becoming more balanced, indicating that people may need to start shifting their attention to the Fed's mission of maximizing employment.
Decision makers will receive the latest data on their favorite inflation indicator, the Consumer Price Index (CPI), this Friday. Another inflation indicator released last week, CPI data, showed that prices rebounded in November due to rising costs in the housing and other service industries.