According to TechFlow, Chicago Fed President Goolsbee said that if the U.S. inflation rate continues to fall back to the 2% target, policymakers should cut interest rates. In an interview, he pointed out that "we are on the road to 2% inflation. If we keep interest rates unchanged when inflation falls, it means tightening, so we should make a decision to cut interest rates."
Goolsbee's comments came after the Fed's favorite inflation indicator, PCE data, rose only 0.1% month-on-month in May, the lowest level in six months. Goolsbee believes that although the unemployment rate remains low, there are warning signs in the job market and inflation seems to be returning to target levels.
He also mentioned that the Fed has kept interest rates high since July last year and needs to see more evidence that inflation is moving toward the 2% target before lowering borrowing costs. Goolsbee will briefly exercise his voting rights as president of the Cleveland Fed at the July meeting.
