Goolsbee Expects 125 Basis Points in Rate Cuts from the Fed by the End of 2025

Foreks - Chicago Fed President Austan Goolsbee stated that he believes policymakers will reduce the U.S. central bank's policy rate by a quarter point this year and by a full point next year, as anticipated in September. Speaking to Bloomberg TV, Goolsbee said, "As long as inflation continues to fall toward the central bank's 2% target, interest rates will be 'much' lower over the next 12 to 18 months."

However, Goolsbee joined Fed Chairman Jerome Powell in noting that policymakers are not in a hurry to lower borrowing costs. The Chicago Fed President suggested that it makes sense to slow down rate cuts at some point due to uncertainty about where the neutral rate lies. "If there is a disagreement about what the neutral rate is, it would make sense to start slowing down how quickly we get there at some point," he said. Goolsbee also added that interest rates remain restrictive, indicating that there is still room to lower borrowing costs to a more neutral level.

Referring to the Fed projections released in September, which plotted the interest rate forecasts of the 19 policymakers on a graph, Goolsbee remarked, "I think we will see rates falling along the line that the dot graph indicated for next year."