(Bloomberg) -- Federal Reserve Bank of Chicago President Austan Goolsbee said it would be “perfectly sensible” for the US central bank to slow down the pace of its interest-rate cuts as it approaches what it deems a neutral setting for monetary policy.
“The field guide version of figuring out what is neutral and what is restrictive involves looking around and seeing how conditions are behaving,” Goolsbee said in an interview with The Overshoot conducted on Nov. 19 and published Tuesday. “You can’t do that in a two-week time frame. It takes a little time, so slowing down probably makes sense in that kind of circumstance.”
Goolsbee, who will hold a vote on the Fed’s rate-setting committee in 2025, has been one of the central bank’s more outspoken doves as policymakers have begun easing policy in recent months. In a TV appearance Monday on Fox Business, he said it was “pretty clear” that the Fed is “on a path, and that path is going to lead to lower rates, closer to what you might call neutral.”
His comments to The Overshoot echoed recent remarks from Fed Chair Jerome Powell, who told reporters after the central bank announced a rate cut on Nov. 7 that “as we approach levels that are plausibly neutral or close to neutral, it may turn out to be appropriate to slow the pace at which we’re dialing back restriction.”
In September, policymakers put the neutral rate at 2.9%, according to their median estimate, far below the current rate level of 4.5% to 4.75%. Some saw it above 3%, but none estimated a neutral rate above 4%.