Fed’s Goolsbee Says Inflation Improving, Hopeful of Soft Landing

Federal Reserve Bank of Chicago President Austan Goolsbee said he sees continued improvement in inflation and is optimistic the central bank can tame price growth without sparking an economic downturn.

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Bloomberg News

Catarina Saraiva

Published Jan 15, 2025  •  1 minute read

Austan Goolsbee, president and chief executive officer of the Federal Reserve Bank of Chicago, during a Bloomberg Television interview at the Kansas City Federal Reserve's Jackson Hole Economic Policy Symposium in Moran, Wyoming, US, on Friday, Aug. 23, 2024. Chair Jerome Powell said the time has come for the Federal Reserve to cut its key policy rate, affirming expectations that officials will begin lowering borrowing costs next month and making clear his intention to prevent further cooling in the labor market. Photo by Natalie Behring /Bloomberg

(Bloomberg) — Federal Reserve Bank of Chicago President Austan Goolsbee said he sees continued improvement in inflation and is optimistic the central bank can tame price growth without sparking an economic downturn.

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Goolsbee spoke a few hours after the release of fresh consumer price data. While a jump in energy costs spurred an acceleration in a broad measure of inflation, underlying price growth slowed in December for the first time in six months.

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“The trend continues to be improvement in inflation,” Goolsbee said Wednesday during a virtual event. “I’m still optimistic for 2025 that we can continue growing and have a soft landing.”

Policymakers cut interest rates for a third straight time when they met in December, lowering interest rates to a range of 4.25% to 4.5%. Many Fed officials have indicated that they expect a much slower pace of rate cuts this year as the labor market remains solid and inflation above their 2% target.

Goolsbee said that rates are still above the so-called neutral rate of interest — where policy neither weighs on nor stimulates the economy.

The Chicago Fed chief said there has been steady progress in housing inflation — one of the biggest drivers of price growth — in recent months. But he noted the US has seen a seasonal pattern for multiple years whereby inflation is lower in the second half of the year and higher in the first quarter. 

Goolsbee was also asked about how President-elect Donald Trump’s proposed policies — including new tariffs and a clamp down on immigration — may impact the economy. 

“If Congress and the president begin drafting policies that are going to raise prices, we’ve got to think about that,” he said. “What will matter is the impact of policies taken as a whole, not some individual policy.”

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