Rates likely need to come down ‘fair amount’ over next year: Fed’s Goolsbee

Investing.com — Chicago Federal Reserve President Austan Goolsbee on Tuesday said he sees interest rates needing to come down a “fair amount” over the next year as rates remain in restrictive policy. 

“Over the next year, it feels to me like rates come down a fair amount from where they are now,” Goolsbee said Tuesday during a keynote conversation about the Midwest economy and US monetary policy

The Chicago Fed president cautioned against holding rates at restrictive levels for too long at a time when the Fed is making steady progress toward its 2% inflation and maximum employment goals.

“If your inflation gets close to target, and your unemployment gets close to where you want it, and the GDP growth of the economy is coming back to something like trend, but the interest rate remains well above where you think it needs to settle..you have to be careful,” Goolsbee added. 

The remarks come just a day ahead of a speech from Fed chairman Jerome Powell due Wednesday and the November nonfarm payrolls report due Friday.  

The expected remarks from Powell is the “Fed’s last chance to communicate its implications ahead of their December meeting,” UBS said in a note, expecting the Fed to cut rates on Dec. 18. 

“The direction of travel is still clear: lower rates. We continue to see a 25 bp cut at the December meeting,” UBS added.