Fed Holds Off on Rate Cuts While Inflation Sticks Above Target

The Chicago Fed chief, Austan Goolsbee, told a Washington conference that cutting interest rates now would be premature because inflation still lingers above the 2 % goal. He warned that past mistakes of assuming price rises were temporary should not be repeated. Goolsbee highlighted the latest data showing core inflation at 3 % in December, a rise of 0. 2 points from November. He pointed out that tariffs may have nudged the number up, but deeper pressures in services and housing keep it high. He stressed that “3 % is not good enough” and that the Fed must stay vigilant. The policy makers should not rush to lower rates before inflation shows a clear path back to the target.Market expectations suggest that the Fed will keep rates steady until at least June, with a chance of cutting in July. The central bank has already lowered rates three times in late 2025, but the next move will depend on how quickly inflation falls. Other Fed officials echoed a cautious tone. Governor Christopher Waller said that while tariffs should be considered, the labor market looks stronger than some data suggest, reducing pressure for cuts. He remains skeptical that recent employment numbers are decisive. The day will see more Fed leaders speak, including Governor Lisa Cook later in the morning, as officials weigh the balance between inflation control and economic growth.