WASHINGTON, Dec 12 (Reuters) – Chicago Fed President Austan Goolsbee said Friday that he dissented against the central bank’s recent quarter-point rate cut because he felt it was better to wait for additional data about inflation and the state of the job market before lowering borrowing costs, particularly given the high concern businesses and consumers still express about rising prices.
Waiting until early next year to cut rates, Goolsbee said, would have given policymakers the benefit of updated government data, with key reports coming next week, while entailing little additional risk to a job market that appears to be “only moderately cooling.”
“We should have waited to get more data, especially about inflation,” said Goolsbee, one of three dissents in the Fed’s 9-3 vote on Wednesday to lower the benchmark interest rate to the 3.5% to 3.75% range.
Kansas City Fed president Jeffrey Schmid also dissented in favor of holding the policy rate steady, while Fed Governor Stephen Miran again argued for a larger half-point cut.
“Waiting to take this matter up in the new year would not have entailed much additional risk and would have come with the added benefit of updated economic data which have been absent lately,” said Goolsbee.
“Given that inflation has been above our target for four and a half years, further progress on it has been stalled for several months, and almost all the businesspeople and consumers we have spoken to in the district lately identify prices as a main concern, I felt the more prudent course would have been to wait for more information.”
“There is little to suggest a deterioration of the labor market so rapid that we could not have waited for the data to come in the early months of next year before deciding to act,” said Goolsbee, who also said he was still “optimistic” that rates could come down next year “by a significant amount” if incoming data shows inflation returning to the central bank’s 2% target.
(Reporting by Howard Schneider; Editing by Chizu Nomiyama)
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