Federal Reserve Gursby: It is too early to cut interest rates based on expected productivity gains; rates will only be cut once inflation subsides

Svmuu News Federal Reserve Goolsbee stated that it is still too early to bet on productivity gains to bring down inflation, and that interest rate cuts are only appropriate once inflation begins to decline. Goolsbee said he expects interest rates to be cut this year, but only if inflation returns to Federal Reserve the target level.The downward trend in inflation has stalled, core service inflation excluding housing remains stubbornly high, and for him, it is unclear whether current interest rates are restrictive; therefore, Federal Reserve, caution is warranted. If interest rates are cut prematurely based on expectations of productivity gains, it could lead to economic overheating.Regarding the labor market, Goolsbee believes that the current environment of low hiring and low layoffs is driven by uncertainty, which may persist following the Supreme Court’s ruling on tariffs. However, he does not view current economic growth or the labor market as fragile.Regarding the Federal Reserve’s balance sheet (Federal Reserve), echoing remarks by Federal Reserve Board member Waller (Federal Reserve), Goolsbee stated that any discussion of a return to a system of scarce reserves requires further examination of its pros and cons. (Jin Shi)