Federal Reserve's Goolsbee: Too Early to Cut Rates Due to Expected Productivity Gains; Rate Cuts Only if Inflation Declines

Odaily News: Federal Reserve's Goolsbee stated that it is still too early to bet that increased productivity will lower inflation, and rate cuts are appropriate only when inflation falls. Goolsbee indicated that he expects rate cuts might occur this year, but only if inflation returns to the Fed's target level. The downward trend in inflation has stalled, and core services inflation excluding housing remains stubbornly high. For him, it is not clear whether current interest rates are restrictive, so the Fed needs to remain vigilant. Cutting rates prematurely based on expectations of productivity gains could lead to economic overheating. Regarding the labor market, Goolsbee believes the current situation of low hiring and low layoffs is driven by uncertainty, which may persist after the Supreme Court's ruling on tariffs. However, he does not believe the current economic growth and labor market are fragile. Regarding the Fed's balance sheet, similar to Fed Governor Waller's remarks, Goolsbee stated that any discussion about returning to a scarce reserve system requires further exploration of its pros and cons. (Jin10)