On Friday, Chicago Federal Reserve President Goolsbee stated in an interview that there is still "considerable room for rate cuts" in the next 12 to 18 months.

This statement resonated with the moderately released PCE inflation data of the day, driving all three major US stock indices higher, with the Dow rising nearly 500 points and the Nasdaq increasing by over 1%.

Goolsbee believes that the current interest rate level is too high for the healthy development of the USA economy:

"I have adjusted the interest rate cut path for 2025 to be slightly more gradual, but I have always said that the overall trend is that inflation has significantly decreased...

I believe we are on the path to 2%, and there is still considerable room for rate cuts in the next 12 to 18 months."

Goolsbee is considered one of the more dovish officials within the Federal Reserve. Previously, on December 6, he hinted that rate cuts may slow down in 2024, which once triggered a downward adjustment in market expectations for rate cuts next year.

At that time, Morgan Stanley's analysis pointed out that Goolsbee's last public statement was before the release of more moderate inflation data in November, and he may not have fully considered the latest inflation data. His latest remarks indicate that after seeing the latest inflation data, his attitude toward rate cuts has become clearer.

The importance of this change in stance lies in the fact that if even the most dovish Federal Reserve officials believe that it is necessary to slow down the interest rate cuts, then the overall policy direction of the Federal Reserve may become more cautious. However, his latest speech reiterated support for interest rate cuts, which undoubtedly injected a boost into the market.

Editor/lambor