Chicago Fed President Goolsbee Cites Shutdown-Related Data Blackout as Reason to Pause Rate Cuts

Chicago Federal Reserve President Austan Goolsbee expressed reservations today about further interest rate reductions, citing a lack of crucial inflation data resulting from the ongoing government shutdown.

While Goolsbee has generally supported a gradual lowering of rates, he voiced concerns during a CNBC interview regarding the absence of key price reports, especially given recent trends of increasing general inflation. “If there are problems developing on the inflation side, it’s going to be a fair amount bit of time before we see that, where if it starts to deteriorate on the job market side, we’re going to see that pretty much right away,” Goolsbee stated. “So that makes me even more uneasy … with front-loading rate cuts and counting on the inflation that we have seen in the last three months to just be transitory and assume that they’re going to go away.” This hesitation comes as the Federal Reserve carefully balances controlling inflation with maintaining a healthy job market.

The Chicago Fed recently released its labor market dashboard, indicating a stable unemployment rate of 4.36% in October, a slight increase from September’s 4.35%. However, the Bureau of Labor Statistics has postponed the release of the October consumer price index report, a key measure of inflation. The September report, used for Social Security cost-of-living adjustments, showed inflation at 3% annually, exceeding the Fed’s 2% target. The release of the Commerce Department’s personal consumption expenditures price index – the Fed’s preferred inflation gauge – is also contingent on resolving the government shutdown; you can learn more about PCE data here.

Goolsbee acknowledged his long-term outlook isn’t “hawkish” on rates, believing they will eventually settle below current levels, but stressed caution given the current uncertainty. “Medium-run, I’m not hawkish on rates. I believe that the settling point for rates is going to be a fair bit below where it is today,” he said. “When it’s foggy, let’s just be a little careful and slow down.” Goolsbee will participate in the Federal Open Market Committee’s December meeting to determine further rate adjustments, but will become an alternate member in 2026. You can find more information about the Federal Open Market Committee on the Federal Reserve Board website.

Goolsbee indicated he will continue to monitor economic data closely and advocate for a cautious approach until a clearer picture of inflation emerges.