Chicago Federal Reserve President Austan Goolsbee told an audience at the National Association for Business Economics on Feb. 24, 2026 in Washington, D.C., that cutting interest rates should wait until there is clearer evidence that inflation is moving back toward the Fed’s 2% objective. He noted that while headline pressures have eased from their peaks, core inflation — the Fed’s preferred gauge, the PCE price index — remained at 3% in December, up 0.2 percentage point from November. Goolsbee warned policymakers that prior assumptions that inflation would prove transitory were a costly error and argued against quickly implementing a package of early cuts. He said stubborn components such as housing costs require vigilance before using rate reductions to stimulate growth.
Key Takeaways
- Speaker: Austan Goolsbee, President & CEO of the Federal Reserve Bank of Chicago, spoke at the NABE conference in Washington, D.C., on Feb. 24, 2026.
- Inflation: Core PCE (Fed’s preferred measure) was 3.0% in December, a 0.2 percentage-point rise from November and above the 2% target.
- Policy stance: Goolsbee advised against front-loading multiple rate cuts until there is more evidence inflation is sustainably declining.
- Housing: Goolsbee highlighted persistent housing inflation as not being driven by tariffs and a key source of underlying pressure.
- Market expectations: CME Group’s FedWatch implied roughly a 50% chance of a June cut and about a 71% probability for July 2026.
- Recent moves: The Fed implemented three quarter-percentage-point cuts in the latter part of 2025.
- Mixed views: Fellow policymaker Christopher Waller signaled a more measured view, urging attention to labor-market strength and to “look through” tariff-driven effects.
Background
After the inflation surge of 2021–2022, the Federal Reserve tightened policy aggressively; by 2025 the Committee had begun easing, enacting three quarter-percentage-point cuts late that year. Policymakers now face a split picture: headline price growth has retreated from its peak, but core measures remain comfortably above the 2% goal that anchors long-run expectations. That persistence has been especially noticeable in services and housing-related components, areas less influenced by one-off goods shocks like tariffs. Fed officials are balancing the risk that acting too soon on cuts could re-ignite inflation against the economic costs of keeping policy tighter for longer.
The National Association for Business Economics is a recurring venue where regional Fed presidents and governors lay out views that shape market expectations. In 2026, markets have been sensitive to each public comment because the Federal Open Market Committee will decide its path amid incoming data on prices and jobs. With several Fed officials—including Goolsbee and Governor Lisa Cook—scheduled to speak at the NABE event, investors monitor language closely for signals about the timing and size of future policy moves.
Main Event
In his remarks, Goolsbee argued that recent indicators showing inflation down from peak levels are welcome but insufficient to justify immediate cuts. He emphasized the policy lesson that assuming inflation pressures were temporary in earlier cycles led to mistakes, and said that a premature easing would risk repeating that experience. Goolsbee specifically called out housing inflation as a persistent element not tied to recent tariff adjustments, suggesting tighter monetary conditions may still be needed to bring services inflation into check.
The December core PCE reading of 3.0% — 0.2 percentage point higher than November — provided the empirical backdrop for his caution. Goolsbee said policymakers should wait for a sustained trajectory back to 2% before reducing rates materially, rather than front-loading cuts in hopes of stimulating growth. He also acknowledged that the Fed could be in a position to cut later in the year if incoming data support a clear downtrend in inflation.
Markets responded by keeping expectations for near-term easing in check: the CME Group’s FedWatch tool showed roughly even odds for a June cut and stronger odds for a July move. Other Fed officials offered different emphases: Governor Christopher Waller, while generally supportive of lower rates, warned that stronger-than-expected labor-market data could reduce the need for additional easing. Lisa Cook was also slated to address NABE later in the day, making the conference a focal point for gauging internal Committee views.
Analysis & Implications
Goolsbee’s caution raises the odds that the FOMC will keep policy unchanged at upcoming meetings unless inflation prints decisively move lower. If the Fed pauses on cuts, financial conditions could remain tighter for longer, weighing on sectors sensitive to borrowing costs such as housing and business investment. That outcome would likely temper near-term growth but lower the risk of inflation expectations drifting upward, which the Fed views as more damaging over time.
In the labor market, stronger payrolls or wage growth would complicate the case for easing. Waller’s comments reflect this trade-off: even officials inclined to cut stress that robust jobs data can justify a slower pace of reductions. For markets, a delayed cut cycle would push expected policy normalization further into the year, increasing volatility around monthly data releases and FOMC communications.
Internationally, a U.S. hold would support a firmer dollar relative to peers pursuing earlier easing, affecting trade balances and capital flows in emerging markets. Central banks abroad may interpret a U.S. pause as permission to be more cautious in loosening; conversely, a swift U.S. easing could prompt competitive moves elsewhere. For households and firms, the timing of cuts will affect mortgage rates, corporate financing costs, and the overall outlook for consumption and investment decisions.
Comparison & Data
| Measure | Nov 2025 | Dec 2025 | Target |
|---|---|---|---|
| Core PCE (annual) | 2.8% | 3.0% | 2.0% |
| Market odds (CME FedWatch) | — | ~50% (June), ~71% (July) | — |
The table shows core PCE rose from 2.8% in November to 3.0% in December, while market-implied probabilities from CME Group assign roughly even odds to a June cut and higher odds to a July reduction. That combination — sticky core inflation plus market anticipation of easing — is the key tension driving Fed rhetoric. Policymakers will be watching monthly PCE, CPI, and labor-market prints to assess whether December represented a blip or the start of a renewed disinflation trend.
Reactions & Quotes
Officials and market participants offered mixed takes after Goolsbee’s remarks. Below are representative excerpts with surrounding context.
“I feel that front-loading too many rate cuts is not prudent in that circumstance.”
Austan Goolsbee, Chicago Fed President
This comment summarized his central message: avoid a rapid sequence of reductions until inflation dynamics clearly point to 2%. He framed the warning by referencing past episodes where officials misread temporary price pressures.
“We should look through tariff impacts, but the labor market looks stronger than we thought.”
Christopher Waller, Federal Reserve Governor
Waller’s remark signaled a more conditional approach: while acknowledging tariff distortions, he stressed that a tight labor market could reduce near-term impetus for cuts. He also questioned whether some recent payroll data constituted durable change or short-term noise.
“Policymakers will continue to weigh incoming data month by month.”
Market strategist (anonymous)
Market strategists noted that public Fed comments this week are being parsed for shifts in the balance of risks, and that trading behavior will closely track monthly inflation and employment reports.
Unconfirmed
- Whether the December uptick in core PCE is the start of a sustained reversal rather than a short-lived fluctuation remains uncertain and will depend on subsequent monthly data.
- The precise contribution of tariffs to December’s inflation increase is not fully quantified publicly; some analysts view tariff effects as temporary but exact measures are still being evaluated.
- Timing and size of future Fed cuts remain projections contingent on incoming inflation and labor-market releases; current market odds are probabilistic, not commitments from the Fed.
Bottom Line
Austan Goolsbee’s public caution underscores a prevailing Fed dilemma: easing too soon risks reigniting inflation, while delaying cuts could constrain growth. With core PCE at 3.0% in December, above the 2% goal, the case for patience is strong among officials concerned about persistent services and housing inflation.
Markets have priced in a meaningful chance of cuts later in 2026, but officials’ comments this week suggest that the Committee will require clearer evidence of disinflation before acting. The path forward will hinge on monthly PCE and labor-market data; investors and policymakers should expect heightened sensitivity to each new release.
Sources
- CNBC — news report summarizing Goolsbee comments and market reaction (media).
- CME Group FedWatch — market-implied probabilities for Fed moves (market data).
- Board of Governors of the Federal Reserve System — official policy documents and statements (official).