Chicago Fed’s Goolsbee Urges Caution on More Rate Cuts Amid Data Blackout

As the federal government shutdown stretches on, Chicago Federal Reserve President Austan Goolsbee is voicing caution about pushing ahead with additional interest rate cuts. His hesitation stems from a growing concern that the central bank is now operating without access to critical inflation data information that would normally guide monetary policy decisions.

Speaking in an interview with CNBC on Thursday, Goolsbee known for his generally moderate stance on rate adjustments warned that the lack of official government data has created a fog of uncertainty around the true state of inflation.

“If there are problems developing on the inflation side, it’s going to be quite a while before we can see them,” Goolsbee explained. “But if the labor market starts to weaken, we’ll notice that almost immediately. That makes me uneasy about front-loading more rate cuts and assuming the recent inflation decline is just temporary.”

Caution in the Face of Incomplete Data

Goolsbee’s comments come at a time when the Federal Reserve is trying to navigate a delicate balance—easing borrowing costs to support economic growth without reigniting inflation. The government shutdown, however, has complicated this task by halting several key economic releases, including the widely followed Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) report, which serves as the Fed’s preferred inflation gauge.

The Bureau of Labor Statistics (BLS) managed to publish the September CPI before the shutdown began, showing inflation running at 3% year-over-year, still above the Fed’s 2% target. But October’s data, originally scheduled for release next week, will not be published until the shutdown ends.

Meanwhile, core inflation which excludes food and energy prices had been trending higher before the data blackout. According to Goolsbee, the three-month annualized pace of core inflation was about 3.6%, suggesting that price pressures had not fully cooled.

“When it’s foggy, the best approach is to slow down,” Goolsbee said. “We shouldn’t rush into making major policy moves based on assumptions or partial data.”

Chicago Fed’s Labor Market Dashboard Shows Stability

The Chicago Fed, which regularly compiles its own set of economic indicators, updated its labor market dashboard this week. The data showed that the unemployment rate in October held steady at 4.36%, a marginal increase of just one one-hundredth of a percentage point from September. Hiring and layoff activity also remained consistent, painting a picture of a labor market that is stable but showing early signs of softening in some sectors.

That resilience gives Goolsbee and other policymakers room to pause before implementing more cuts. The Fed has already lowered rates twice this year, including a quarter-point reduction at its most recent meeting in late October, bringing the federal funds rate to a range between 3.75% and 4.00%.

Still, Goolsbee emphasized that the absence of fresh inflation readings makes it difficult to know whether the economy’s cooling trend will continue or reverse course.

“We rely heavily on data to guide our decisions,” he said. “Without it, there’s a risk of either over-tightening or over-easing, and both come with consequences.”

Balancing Inflation Concerns and Economic Risks

While Goolsbee has generally supported gradual rate reductions to sustain economic momentum, his latest remarks suggest a more cautious tone. The key concern, he noted, is that the Fed could unintentionally cut rates too quickly, only to find out later that inflation is reaccelerating.

He also acknowledged that, over the medium term, rates will likely settle at a level below current levels, reflecting a more normalized post-pandemic economy. However, he argued that the timing of further moves should depend on verified evidence rather than assumptions.

“Medium-run, I’m not hawkish on rates,” he clarified. “But right now, with inflation data on pause and uncertainty high, we need to be careful. It’s better to take a step back than to act blindly.”

December Fed Meeting Looms

The Federal Open Market Committee (FOMC) is scheduled to meet in December, where members will decide whether to deliver another rate cut following reductions at their last two meetings. Goolsbee, who currently holds a voting seat on the committee, will participate in that decision before rotating to an alternate role in 2026. He is set to regain a voting position in 2027.

Market participants are closely watching signals from officials like Goolsbee to gauge how the Fed might proceed. Recent comments from several policymakers have echoed his caution, emphasizing that while rate cuts may continue into 2026, decisions will depend on credible evidence of slowing inflation and stable employment.

The Bottom Line

Goolsbee’s message underscores the growing challenge the Federal Reserve faces in a data-scarce environment: it must make consequential monetary policy decisions while effectively “flying blind.”

With the government shutdown delaying critical economic reports, the Fed is forced to rely more heavily on private data, regional surveys, and anecdotal evidence tools that, while useful, don’t replace official readings on prices and wages.

In this uncertain climate, Goolsbee’s stance serves as a reminder that caution may be the Fed’s most prudent course, at least until the economic picture becomes clearer. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.