(Reuters) – Chicago Federal Reserve President Austan Goolsbee said on Friday that he now expects a shallower path for interest rate cuts in 2025 than previously, but added that he still believes the U.S. central bank’s key interest rate will fall “by as much as… Hakim” next year.
“Policy uncertainty makes it particularly difficult to make estimates about what the neutral rate is and what the inflation rate in particular is,” Goolsby told CNBC. “That’s part of the reason I’m a little less deep” on the 2025 interest rate path. However, he said inflation still looks like it’s heading toward the Fed’s 2% target.
With interest rates well above the final stop point of about 3%, lower inflation means the Fed will need to cut it “a little bit” over the next 12 to 18 months, Goolsbee said.
Goolsbee had previously indicated that he felt interest rates would need to fall by 100 basis points next year, in line with the previous view of his fellow policymakers. Forecasts released this week after the Federal Reserve cut interest rates by a quarter of a percentage point to a range of 4.25%-4.50% show that most US central bankers see only 50 basis points of cuts next year.
(Reporting by Anne Safire, Editing by Paul Simao)