The Chicago Fed’s Goolsbee says he’s cautious about additional fee cuts through the lockdown

Chicago Federal Reserve President Austan Goolsbee expressed concerns Thursday about cutting interest rates further, saying the government shutdown has led to a loss of key inflation data.

While Goolsbee has otherwise advocated for a gradual cut in interest rates, the central bank official said in a CNBC interview that he was concerned about the lack of key price reports, especially given overall inflation has trended higher recently.

“If problems develop on the inflation side, it will be quite a while before we see that, and if there is a deterioration on the labor market side, we will see that pretty much immediately,” Goolsbee said. “That makes me even more uneasy … when I move forward with rate cuts and count on the fact that the inflation we’ve seen in the last three months is temporary and I expect it to go away.”

Goolsbee spoke as the Chicago Fed updated its own dashboard of labor market indicators. The data set suggested a stable unemployment rate in October and a steady pace of hiring and firings. The Chicago Fed’s unemployment rate indicator for the month was 4.36%, up just one-hundredth of a percentage point from September.

However, the Bureau of Labor Statistics will not release its consumer price index report for October, which was scheduled for next week.

The BLS released a report for September despite the shutdown because that particular value is used for Social Security cost of living adjustments. That report showed inflation at 3% per year, compared to the Fed’s target of 2%. Whether the Commerce Department releases its personal consumption expenditures price index, the Fed’s preferred measure, depends on the shutdown’s resolution.

Goolsbee said the lack of inflation reports concerns him because three-month trends before the shutdown showed core inflation (excluding food and energy prices) at 3.6% on an annual basis.

“In the medium term, I am not hawkish on interest rates. I believe that the interest rate equalization point will be significantly lower than today,” he said. “If it’s foggy, we should just be a little more careful and drive slower.”

Goolsbee will get a vote when the Federal Open Market Committee meets in December to decide whether to cut interest rates again after cuts at the previous two meetings. However, he will move to deputy in 2026 before returning to a voting role in 2027.