On December 22, the Financial Association reported (editor Xia Junxiong) that Chicago Fed President Goolsbee stated on Friday that he slightly lowered his forecast for the rate cuts next year but still expects the Federal Reserve to moderately cut rates next year.

The Federal Reserve announced a 25 basis point rate cut on Wednesday, lowering the target Range for the federal funds rate to 4.25%-4.5%. Although the rate cut action met market expectations, the Federal Reserve also significantly reduced its expectations for the number of rate cuts next year. The dot plot shows that policymakers expect to cut rates twice in 2025, while the September forecast was four times.

In a media interview, Goolsbee stated: "The uncertainty of policy makes estimating the neutral rate and inflation particularly difficult. This is also part of the reason why my expectations for the interest rate path in 2025 have become slightly more moderate."

"Overall, inflation has significantly decreased. I believe we are moving towards the 2% target," he said.

As a dovish official, Goolsbee will replace Cleveland Fed President Harmack next year as a voting member of the Federal Open Market Committee (FOMC).

The Federal Reserve holds eight rate meetings each year, where all 12 regional Fed presidents discuss and debate monetary policy, but only seven Fed governors and the president of the New York Fed have fixed voting rights, with only four of the remaining 11 regional Fed presidents having voting rights that rotate each year.

Goolsbee previously stated that he believes rates need to be cut by 100 basis points next year. However, with Trump likely to take office again, his tariff policy may cause inflation in the USA to rise again.

Goolsbee pointed out that the current policy interest rate is much higher than its final target level (around 3%). With inflation decreasing, the Federal Reserve needs to significantly lower interest rates within the next 12 to 18 months.

Goolsbee positively assessed the latest inflation data released that day. According to data published by the USA Department of Commerce's Bureau of Economic Analysis, the USA PCE in November increased by 2.4% year-on-year and 0.1% month-on-month, marking the smallest monthly increase since May; the core PCE in November increased by 2.8% year-on-year and 0.1% month-on-month; all four indicators fell short of market expectations.

The core PCE price index is the inflation indicator favored by Federal Reserve officials, and the so-called 2% long-term inflation rate target is based on core PCE data.

编辑/jayden